Nigeria’s debt hits N35.5tn, says DMO

Nigeria’s total debt rose to N35.5 trillion at the end of June 2021, the Debt Management Office has said.

The new figure, it stated, was 7.75 per cent higher than the N32.9 trillion recorded at the close of last year.

Director-General of the DMO, Patience Oniha, said on Wednesday that the external debt accounted for N13.7 trillion or 38.7 per cent while approximately N21.8 trillion was sourced from the local market.

She explained that 83.07 per cent of the total debt was held by the Federal Government while the 36 states and the Federal Capital Territory’s borrowings accounted for 16.93 per cent.

The percentage of the FG’s share of the national debt had increased from 81.94 per cent as at December 2020.

Minister of Finance, Budget and National Planning, Zainab Ahmed, had disclosed at a session organised by the African Development Bank that debts of some states were not captured in the figures regarded as national debts.

Oniha said the amount remained within fiscally accepted bound except that not much is done to shore up poor revenue.

She explained that China accounted for about 10 per cent of the external debt (which amounts to approximately N1.37 trillion), while the multilateral organisations had the largest share of 54.9 per cent.

Oniha, in a virtual media chat on Wednesday, said the country risked the debt sustainability issue if it failed to grow the current low revenue profile, which places Nigeria in the poorest category among its peers.

She said, “We should focus on revenue. The good thing about it is that the Minister of Finance, Budget and National Planning has started a programme aimed at growing the revenue profile.

“We must discipline ourselves to follow through to grow our revenue. If we continue to borrow and do nothing about growing our revenue base as other countries have done, we may have a debt sustainability challenge.”

Comparing the tax to gross domestic product of 11 countries, the DG said Nigeria as of 2019 was one the nations with the least ratio.

The selected countries are the United States, United Kingdom, Brazil, South Africa, Kenya and Mexico. Others included Canada, Morocco, Ghana and Angola.

While South Africa had the highest tax to GDP of 26.7 per cent, Nigeria sat at the bottom with 5.68 per cent. Angola, which came after Nigeria from the bottom, recorded 9.4 per cent tax to GDP.

Oniha said it was important to interrogate the reasons the country’s huge GDP has not translated to revenue, and that it was time the authorities aggressively pursued income-yielding policies.

She said Nigeria’s debt to GDP remained considerably low at 21.92 per cent, up from 21.61 per cent last year. She, however, said it could increase to 35 per cent when the ways and means facility (WMF), that is, overdrafts with the Central Bank of Nigeria (CBN), is added to the debt stock.

On the current value of the WMF, the DG said she could only give information on the status at the beginning of the year, when it was estimated at N10 trillion, suggesting that the figure could be higher.

She admitted that the government had overreached the limit set by the CBN Act, stressing that the government was compelled to do so owing to the revenue shortfall.

“We are currently working at converting it to a tenor facility. This is because overdrafts should be cleared when they are due,” the DMO boss started.