Nigeria's Debt Now 6.02 Trillion Naira

Chairman of the Senate Committee on Local and Foreign Debts, Senator Ehigie Uzamere (ACN, Edo), said yesterday that the country’s total debt now stands at US$39.72 billion (N6.02 trillion), of which external and domestic debts are US$5.398 billion and N5.210 trillion, respectively.

He said during the inauguration of the committee that “this amount is unsettling and called for concern.” This is even as the Deputy Senate President, Senator Ike Ekweremadu, berated past administrations in the country for taking foreign loans for specific projects, which were later abandoned.

In his opening remarks at the committee’s inauguration, Uzamere urged governments at various levels to “focus more on borrowing for projects with self-repaying capacity and job generation rather than borrowing to finance gaps in budgets that are largely recurrent”. He noted that while the total debt of N6.02 trillion was more than the Federal Government’s annual budget, its external component translated to 2.76 per cent of the nation’s Gross Domestic Product (GDP) and its domestic component translated to 17.53 per cent of GDP.

He further explained that with the 20.29 per cent of GDP that the total debt constitutes in Nigeria’s economy compared to “global limit of 40 per cent, the country was on safe ground” but noted that “more hard work and a serious approach” was needed “to translate our debt into asset to accelerate our infrastructural development and boost the economy.”

He was, however, not comfortable with the Debt Sustainability Analysis (DSA) supplied by the Debt Management Bureau, asserting, “…there are other Debt Sustainability Indices (DSI) that are more realistic and revealing than the Debt/GDP ratio.” “Do we have the capacity to repay this money considering our yearly revenue profile? What is the future value of the total debt in 10 years’ time?” Ehigie asked rhetorically, and promised engaging the executive to generate good quality data for its DSA.

“Needless to say that proper DSA reveals a country’s susceptibility to debt distress; the committee will align its energy with the executive to review the country’s debt policy and thereto, redefine its debt strategy,” he continued. Uzamere, however, enjoined the government to wholly embrace Public Private Partnership (PPP) through adequate legal framework to safeguard workability of the scheme as it is a sure way to hasten the provision of infrastructure with less financial burden to the government.

“Unfortunately, due to inadequate information the provision for PPP in the Debt Management Office (amendment) Bill was rejected”, bemoaned, “National Assembly needs to revisit this issue and many others that were rejected in the Bill so that we will be seen as giving the necessary backing to effective debt management”. “It is our firm belief that no matter how effective our debt management is, without fiscal discipline, no meaningful success can be achieved; I therefore call on all tiers of government to be prudent, accountable and transparent in the management of our lean finances.

The committee will do everything within its mandate to encourage institutional capacity; we will therefore initiate advocacy campaign for States to establish and develop their Debt Management Departments; we are mindful of the fact that a slack in one state alone can affect the entire  country; after all, we have only one economy”, Uzamere added.

Source: ThisDayLive