If the National Assembly approves President Muhammadu Buhari’s latest request to borrow, the country’s debt profile may rise to about N38 trillion, if figures from the Debt Management Office (DMO) are anything to go by.
This includes the domestic and external debt of the Federal Government, the 36 state governments and the Federal Capital Territory, FCT.
Public debt stock stood at N35.465 trillion as at June 30, Director-General of the Debt Management Office, DMO, Ms. Patience Oniha, stated on Wednesday.
In the letter from President Buhari seeking approval from the National Assembly for new borrowings, dated 24th August, 2021, he explained that the projects listed in the 2018-2021 Federal Government Borrowing Plan are to be financed through sovereign loans from the World Bank, French Development Agency (AFD), China-Exim Bank, International Fund for Agricultural Development (IFAD), Credit Suisse Group and Standard Chartered/China Export and Credit (SINOSURE) in the total sum of USD4,054,476,863.00; Euro 710,000,000.00 and Grant Component of USD125,000,000.00.
At an exchange rate of N500 to the dollar and N645 to the Euro, the new borrowings will come to about N2.5 trillion.
Nigeria’s total public debt stock was N33.107 trillion or USD87.239 billion, as at March 31, 2021.
This indicated a N2.358 trillion rise in the debt stock from the end of the first quarter of the year to the end of the second quarter.
But the ruling All Progressives Congress (APC) does not see anything wrong in the borrowings, despite complaints from the opposition Peoples Democratic Party (PDP) and other commentators.
It says borrowings by the President Muhammadu Buhari-led federal government is for the good of the country as the money is used to develop critical infrastructure that is stimulating economic growth, generating jobs, reducing poverty and improving the general well-being of the citizenry.
It adds in a statement on Wednesday: “unlike in the brazen looting days of the Peoples Democratic Party (PDP), the borrowings are designed to finance the deficit in the 2021 budget to enable the realisation of the Nigerian Economic Sustainability Plan that touches key sectors such as infrastructure development, boosting healthcare services, strengthening agriculture to deepen food security, more energy generation and continued tackling of the ravaging COVID-19 global pandemic.
“From the forgone, it is abundantly clear that the borrowing is hinged on genuine needs and based on the necessity to strengthen the foundation of the national economy and achieve the desired primary purpose of government of uplifting the living standard of the citizens.
“It was in PDP’s era that loans to fund power generation, purchase arms and ammunition to fight a raging insurgency was misappropriated and diverted to fund PDP activities; and the borrowed money ultimately found its way to the pockets of cronies, friends and family members of administration officials. Nigeria is still servicing a $460 million loan taken from China to fund a phoney Abuja Closed-Circuit Television (CCTV) contract awarded in August 2010.
“Nigerians should also reflect and recall that the PDP had in its 16 years of misrule pushed the country into a dark ditch of insolvency, and a period in which most state governments could not pay workers salaries, not even the minimum wage, or settle contractors’ bills and cater for patients in hospitals, to name a few.
“In a welcome and commendable change, the Buhari-led adminstration through its economic management skills bailed out states to pay salary backlogs and embarked on large-scale infrastructure development projects that stimulated the economy and exited the era of insolvency and recession caused by the ineptitude of the PDP administation.
“The APC welcomes the continued and multi-partisan cooperation which exists between the executive and legislature on national issues. This will ensure good governance, particularly in the area of economic development. The country and citizens are the ultimate beneficiaries.”
A breakdown of the public debt figure under review indicated that that external debt was N13.711 trillion, representing 38.66 per cent.
On the other hand, domestic debt was N21.754 trillion, representing 61.34 per cent of the total stock.
The Federal Government accounted for N11.828 trillion of the external debt and N17.632 trillion of the domestic debt.
States and the FCT’s external debt stood at N1.883 trillion, with a domestic debt stock of N4.122 trillion.
The breakdown of the external debt showed that the bulk of the debt is owed to multilaterals (World Bank Group and the African Development Bank Group), which accounted for 54.88 per cent.
The DMO boss, Oniha, explained that the issues of rising debt, high debt service to revenue ratio and utilization of borrowed funds were germane.
She said that members of the public should not lose sight of the facts which necessitated borrowing which included: “Huge Infrastructure Deficit , Recession (twice in the last six years), Consecutive Budget Deficits , Low Revenue Base, compounded by dependence on one source – crude oil which prices crashed and at a point, at the peak of the COVID-19 pandemic had no buyers.”
