The Federal Government on Monday allayed fears over Nigeria’s foreign debt profile, saying it has not reached its debt ceiling of 25% in total public debt stock to Gross Domestic Product (GDP).
- Buhari*
Some prominent Nigerians, including former president Olusegun Obasanjo and former vice president Atiku Abubakar, have recently raised concern over the nation’s debt portfolio, saying Nigeria may be on the path of bankruptcy.
At his year-ending press briefing on Monday held in Lagos however, Minister of Information and Culture, Alhaji Lai Mohammed said “Nigeria has not reached its debt ceiling of 25% in total public debt stock to GDP (Debt/GDP), as it is currently on 18.99%, but its debt service to revenue ratio has been higher than desirable, which explains why the government is moving ahead with its economic diversification efforts, in addition to increasing oil and non-oil revenues and widening the tax base.”
The Minister said “Recently, 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:
i. 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.
ii. 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.
iii. 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.
iv. 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.
v. In the face of massive infrastructural decay, no responsible government will sit by and do nothing. This Administration’s borrowing, therefore, is aimed at revamping our infrastructure, including roads, bridges, railways, waterways and power, to help
unleash the potential of the nation’s economy. The loans for the educational sector will contribute to the development of our human capital while the loans for the agricultural sector will help the move to diversify the economy.”
He added that “ 2019 has been a momentous year, and this Administration has taken Nigeria closer to its Next Level target. The economy has continued to witness a strong performance, building on the steady recovery since the last recession.”
- Mohammed at end of the year press briefing*
Alhaji Mohammed noted that “Thanks also to the (border) drill, rice production has received a massive boost, creating millions of jobs and moving Nigeria closer to achieving self-sufficiency in rice production. The fight against corruption has received a shot in the arm, with the launch of the Administration’s Financial Transparency Policy and Portal, the increased prosecution and convictions and the tracking of the huge resources being allocated to constituency projects. The government has continued to revamp the nation’s infrastructure, while taking more steps to increase its earnings from its natural resources through the amendment of the necessary laws.
He said “Security of lives and property has remained a priority of this Administration, hence the tremendous improvement that has been witnessed in fighting terrorism, banditry, kidnapping and other acts of criminality. It was indeed a challenging year in terms of insecurity, but the federal government faced the challenge squarely to cancel doomsday predictions from the political opposition and their allies. The fight against insecurity was boosted by the border drill, which curtailed access to weapons by terrorists and other criminals.”
Commending Nigerians for their support and perseverance, he assured that the President Muhammadu Buhari administration will continue to take all measures necessary to secure the lives and property of all citizens while enhancing their welfare.
“ We urge the opposition to join hands with us to move Nigeria to the Next Level, instead of engaging in scorched-earth opposition that benefits no one,” he stated.