With Nigeria’s debt stock at $83.8 billion and looking to rise to an all generations high of $113 billion, the Federal government’s spokesman and Minister of Information and Culture, Alhaji Lai Mohammed, still thinks all is well.
Last Friday, former President Olusegun Obasanjo was of the opinion the country was on the path to bankrupcy; while former Vice President and Peoples Democratic Party (PDP) presidential candidate in the last election, Alhaji Atiku Abubakar, fears that the future of coming generations is being mortgaged.
However the federal government spokesman on Monday reeled out stats to show Nigeria is still good to run up debts.
Said Lai Mohammed at a press conference in Lagos: “There have been concerns in certain circles about the country’s growing debt, both domestic and external.
“In the process, there have been some misrepresentations and scare mongering. We therefore believe it is important to put things in the right perspective, so our citizens will be well informed.
“The public debt stock is actually a cumulative figure of borrowings by successive governments over many years. It is therefore not appropriate to attribute the public debt stock to one administration.
“Nigeria’s total public debt stock in 2015 was $63.80 billion, comprising $10.31 billion of external debt and $53.49 billion domestic debt. By June 2019, the total debt stock was $83.883 billion, made up of $27.163 billion of external debt and $56.720 billion domestic debt. It is therefore not correct to say that Nigeria’s external debt alone is $81.274 billion.
“There is yet no cause for alarm. This is because Nigeria has a debt ceiling of 25% in the total public debt stock to Gross Domestic Product (Debt/GDP), which it has operated within. The ratio for Dec. 31 2018 and June 30 2019 were 19.09% and 18.99% respectively.
“The debt service to revenue ratio has however been higher than desirable, hence the push by the government to diversify the economy and increase oil and non-oil revenues significantly. The government is also widening the tax base to capture more tax-paying citizens.”
President Buhari has sent a letter to the National Assembly asking approval for a loan of nearly $30 billion in the new year.
At an event in Lagos last Friday, Obasanjo said, “Our political leaders have suddenly developed not just a taste for, but a voracious appetite for debt. As usual, most of such debts procured are hardly thought through. Predictably, ability to repay such debts is lacking.
“Unfortunately for us and unlike in the past, the new creditors are less tolerant of our limitations and inadequacies and are now demanding to manage institutions and agencies with a view to recouping their loans.
“It has recently been pointed out that in 2018 that total debt servicing took over 60 per cent of government revenue. What’s more, we are not doing enough to address the fundamental, deep-seated and structural challenges that inhibit the expansion of our economy.
“Such a situation talks about an impending bankruptcy. No entity can survive while devoting 50 per cent of its revenue to debt servicing.”