Nigeria’s Public Debt Jumps N1.551trn In Three Months.
Nigeria’s total public debt has increased by N1.551 trillion, standing at N39. 556 trillion or $95.770 billion as of December 31, 2021
The figure disclosed by the Debt Management Office (DMO) at an interactive session in Abuja, Thursday morning is a huge increase over Nigeria’s debt profile of N38.005 trillion as of September 30 2021.
The September figure showed that Nigeria’s Public Debt increased from N35.465 trillion at the end of Q2 2021 by N2.540 trillion to the end of September level.
According to the DMO, “The increase of N2.540 trillion when compared to the corresponding figure of N35.465 trillion at the end of Q2 2021 was largely accounted for by the $4 billion Eurobonds issued by the Government in September 2021.”
It added, “The issuance of the $4 billion Eurobonds has brought significant benefits to the economy by increasing the level of Nigeria’s External Reserves, thereby supporting the Naira Exchange Rate and providing the necessary capital to enable the Federal Government finance various projects in the Budget.
“The triple tranche $4 billion Eurobond, issued in September 2021, was for the implementation of the New External Borrowing of $6.18 billion in the 2021 Appropriation Act.”
Speaking Thursday Director-General, DMO, Patience Oniha said that the total Public Debt Stock which represented the total External and Domestic Debts of the Federal Government of Nigeria (FGN), the 36 State Governments and the Federal Capital Territory (FCT) is still at 22.74 per cent to Gross Domestic Product (GDP) as at December 31, 2021, and also within Nigeria’s self-imposed limit of 40 per cent.
“This ratio is prudent when compared to the 55 per cent limit advised by the World Bank and the International Monetary Fund (IMF) for countries in Nigeria’s peer group, as well as, the ECOWAS Convergence Ratio of 70 per cent”, stated the DMO boss who noted that the 2021 figure was about 21 per cent higher, 2020 profile of N32.915 trillion or $86.392 Billion. c
According to World Bank data, the debt to GDP in 2020 of other African countries like Angola was 136. 54; Ghana, 78.92; South Africa, 69.45; Kenya, 67.57; the United States of America, 133.92.
The latest debt stock also included the N5.489 trillion new Borrowings by the FGN as contained in the 2021 Appropriation and Supplementary Acts to part-finance the Deficit.
A breakdown showed that domestic debt was N23.701 trillion or 69.92 per cent; while external debt was N15. 855 trillion, representing 40,08 per cent.
Of the total stock, the federal government portion was N33. 228 trillion, and the domestic portion was N19.243 trillion and external N13. 885 trillion.
The 36 state governments and the Federal Capital Territory owed a total of N6.428 trillion.
Oniha said the borrowings were already on a downward trajectory until the 2015-2016 recession and the COVID-19 pandemic which brought the global economy to its knees.
The long years of the budget deficit, even when oil prices were high is also responsible for the hike.
The nation’s challenge now is increasing poor revenue profile and bridging the wide infrastructure gap in the country.
“Nigeria has a double challenge of a low revenue base and a huge infrastructure gap,” stating that it was compounded by dependence on only crude oil, with the World Bank ranking Nigeria as 194th in terms of Revenue to GDP Ratio out of 196 countries in 2020, only ahead of Yemen and Somalia.
In terms of interest payments as a percentage of revenue, Nigeria’s figure was as high as 33. 4, higher than many other countries such as Kenya 23. 6; South Africa 16.3; Angola 32.6; and the United States 7.1.
In terms of revenue as a percentage of GDP, Nigeria stood at a mere 6.3 compared with other countries such as the United States, 30.6; South Africa, 25.2; Angola 20. 9; Kenya 16.6; Ghana 12. 5.
The DMO boss said that the federal government has taken steps to reduce borrowing through several measures to raise revenue. as well as, encourage private sector infrastructure financing.
She said that the Presidential Infrastructure Development Fund (PIDF) managed by the Nigeria Sovereign Investment Authority (NSIA) being invested in critical road and power projects across the country such as the 2nd Niger Bridge, Lagos to Ibadan Expressway, Abuja to Kano Road and the Mambilla Hydroelectric power, was such example.
She added that the Infrastructure for Tax Credit initiative encouraged companies to commit their resources to the construction of new roads or the rehabilitation of old ones with the assurance that such expended resources would be recouped from their Companies Income Tax (CIT), as another.
The D-G disclosed that several companies including Nigeria Liquified Natural Gas Limited (NLNG), the Dangote Group, Flour Mills of Nigeria, NNPC Ltd, BUA Group and MTN Nigeria were already participants in the scheme.
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