Tag: Nigeria’s debt

“National debt hits N46tn in fourth quarter of 2022” -DMO reveals

The Debt Management Office, DMO, on Thursday, revealed that Nigeria’s total public debt stock increased to N46.25tn or $103.11bn in the fourth quarter of 2022.

The latest figure has made members of the organised private sector and economists to predict that tougher days are ahead for Nigerians and firms.

The national debt as of September, 2022, was put at N44.06tn.

According to the office, the new figure consists of the domestic and external total debt stocks of the Federal Government and the sub-national governments (36 state governments and the Federal Capital Territory).

The latest figure was disclosed in a statement by the Debt Management Office.

The DMO stated that the comparative figure of public debt as of December 31, 2021, was N39.56tn or $95.77bn.

TheNewsGuru.com (TNG) reports that this means that the country’s debt increased by N6.69trn or $7.34bn within one year.

Stating reasons for the increase, the DMO said new borrowings by the FGN and sub-national governments, primarily to fund budget deficits and execute projects and the issuance of promissory notes to settle some liabilities also contributed to the growth in the debt stock.

The statement read in part, “As of December 31, 2022, the total public debt stock was N46.25tn or $103.11bn. In terms of composition, total domestic debt stock was N27.55tn ($61.42bn) while total external debt stock was N18.70tn ($41.69bn).

“Amongst the reasons for the increase in the total public debt stock were new borrowings by the FGN and sub-national governments, primarily to fund budget deficits and execute projects. The issuance of promissory notes by the FGN to settle some liabilities also contributed to the growth in the debt stock.

“On-going efforts by the Government to increase revenues from oil and non-oil sources through initiatives such as the Finance Acts and the Strategic Revenue Mobilization initiative are expected to support debt sustainability.”

The DMO further explained that the debt figure under review was 23.20 per cent of the Gross Domestic Product, indicating that it was well within the limits set by both the federal government and international organisations.

“The total public debt to gross domestic product (GDP) ratio for December 31, 2022, was 23.20 per cent and indicates a slight increase from the figure for December 31, 2022, at 22.47 per cent.

“The ratio of 23.20 per cent is within the 40 per cent limit self-imposed by Nigeria, the 55 per cent limit recommended by the World Bank/International Monetary Fund, and, the 70 per cent limit recommended by the Economic Community of West African States.”

Reacting, the Director, Center of Promotion for Private Enterprise, Muda Yusuf, expressed concern over the multiplier effect of the latest debt figure, stating that the country would continue to struggle with servicing of debts if drastic steps were not taken.

He said, “What this means is that the country will continue to struggle with servicing of debts. Already, debt service is close to 80 per cent of our revenue and it is likely to increase with the new figure.

“The implication is that we are likely to get ourselves into a vicious cycle of debt, like a debt trap because the higher debt service burden is, when your revenue is low, the more you continue to borrow to be able to sustain the system. Remember that the N23tn from the CBN Ways and Means is not part of this. If we add that, it will make it almost N80tn.

On possible solutions, Yusuf stated that removal of fuel and foreign exchange subsidy would increase the nation’s revenue.

“A possible solution is to increase our revenue through the removal of fuel subsidy and foreign exchange subsidy. This will bring relief of N8trn. We also have to address increasing oil production, curb leakages, cut our spending,” he added.

On his part, a professor of Economics at the University of Uyo, Akpan Ekpo, “Those figures are worrisome because our revenue base is very low. I just hope the borrowing was for infrastructure and the government is transparent on what it was spent on.

“Those debts should not be on recurrent expenditure because that is a waste. Borrowing to fill up the deficit is not good for our economy either. If it was spent on capital projects, can the projects pay the debts back? The debt is for future generations. We need to get information on debt servicing revenue ratio or debt revenue because our revenue base is not healthy at all.”

A professor of Financial Economics at the University of Uyo, Leo Ukpong, posited that the inability of the country to service might lead to an increase in taxes.

He said, “Borrowing tends to have a negative effect on the credibility of the borrower. Clearly, we know that public debt is very high and this increase is not good for the country.

“When debts rise, you run the risk of bankruptcy but since a country can’t be declared bankrupt, it is likely that taxes will be increased which will reduce our purchasing power.”

Members of the organised private have also reacted to the development.

On his part, the Deputy-President of the Lagos Chamber of Commerce and Industry, Gabriel Idahosa described Nigeria’s continued recourse to borrowing as worrisome for the economy.

Idahosa said, “We are looking at external borrowing that is not tied to specific revenue-generating projects, that are not collateralised. For example, if you want to take a loan to build a seaport, to be paid from the operations of the seaport, it can still raise money. But if you want to borrow money and use it for various projects that do not generate income, hoping to pay from the federal budget, then you are not likely to make any progress.”

March 31, 2023
DEBT: Nigerian govt in talks with IMF, World Bank

In a bid to restructure the country’s debts, the Nigerian government has been in talks with the International Monetary Fund (IMF) and the World Bank.

This was revealed by the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, who noted that the country was considering tapping from the IMF’s newly created Food Shock Window, that allows member-countries to access emergency financing instruments.

TheNewsGuru.com reports that new window would be available for a year to provide additional access to emergency financing for countries facing urgent balance-of-payment need related to the global food crisis.

Speaking on the sidelines of the ongoing IMF/ World Bank annual meetings in Washington D.C, Ahmed said: “It is a fact that Nigeria’s debt has increased over the last three to four years and this increase in debt was occasioned by the different kind of exogenous shocks that the country faced which is not unique to Nigeria.

“The situation we have by our 2023 projection is that we will be needing to use about 65 per cent of our revenue to service debt. Unfortunately, the cost of debt service is rising because of the rising interest rate globally which is resulting also in higher debt service costs.

“But our projection from the debt sustainability analysis is that Nigeria is able to cope with its debt service in 2022 as well as in 2023. We have been engaging financial institutions to look at the opportunity to restructure our debt to further stretch the debt service period to give us more fiscal relief. Those are some of the things we want to achieve in this meeting.”

Furthermore, she said the country was considering borrowing from the recent window created by the IMF for countries facing urgent balance-of-payment need related to the global food crisis.

She explained: “The last drawing we had from the IMF was the second round of Special Drawing Right (SDR) that was provided for all the member countries of the IMF.

“The IMF recently offered a food security package that countries can draw and it is equivalent to about 50 per cent of their SDRs. We have not taken a decision to draw on that, we have to examine what are the requirements to see if it will be safe for us to draw because we don’t want to be drawn into an IMF program and as it is, we are studying the terms and conditions.

“If they work for us, we will now decide to take it because the funds can certainly be useful in terms of adding to our reserves and also in terms of helping us to cope with the challenges that the country is facing especially as the floods that have been happening right now in the country is going to cause more stress on our food system.

“We realise that the floods that are happening are currently destroying crops and therefore the harvest that is expected will be much less and it will mean that more of our people will struggle to be able to afford food.”

Commenting on the 2023 Appropriation Bill that was presented by the president last week, the minister said the plan in the Medium Term Economic Framework (MTEF) for 2023 to 2025 and the 2023 budget scaled down on the subsidy that the government has to carry.

According to her, the projection was that, “we should be able to exit subsidy by the middle of next year and at the same time we have to be able to provide more support to the poor and the vulnerable in our society especially as vulnerability is increasing and will increase as a result of the climate change that we are beginning to see in the country.”

She added: “We took all of these into account in designing the MTEF and the budget. We have been very pessimistic in our projections. For example, the oil price that we fixed was at $70 and everybody is asking why we are we staying at $70 when the prices are averaging $90?

“So those are some of the safeguards that we have put in because we do have production problems, but we are beginning to see some uptick in the production numbers and we hope that by the end of the year, we would be able to circle back to the production benchmark as provided for in the budget.”

She also said the country was targeting a 3.7 per cent growth for 2023.

“On the borrowing side, it means that we are having to use more of our naira to pay debts that are dollar-denominated and as the dollar strengthens and the interest rate goes up globally, it affects us so we ended up having to use more of our revenues to pay the debt,” she added.

Meanwhile, the IMF yesterday restated the need for Nigeria’s policymakers and leaders to save some of the country’s oil earnings in these times of high energy prices as well as increase its domestic revenue drive in order to reduce external borrowings.

The Fund also disclosed that 19 out of 35 African countries are presently in debt distress or at risk of debt distress and stressed the need for more responsible fiscal measures to be taken by countries in the continent.

The Divisional Chief, Fiscal Affairs Department IMF, Paulo Medas, who said this during a media briefing said: “Nigeria has benefited from higher oil revenues. We haven’t seen an improvement in the deficits as we hoped because of the large energy subsidies, but also other issues with the production of oil and other pressures on the budget.

“So, our recommendation is to try to save some of these oil revenues but also address these emergency needs. Another aspect I would say is that Nigeria is one case where tax revenues are really low and this really undermines the capacity of the government to mark these types of shocks and to provide key services.”

On his part, Director of Fiscal Affairs Department, IMF Vitor Gaspar, pointed out that African countries were experiencing high inflation, debt crisis and an impending food crisis as well as other socioeconomic concerns.

“What we are seeing now, according to estimates by the World Bank is that 11 million more people would enter extreme poverty now than what should have been expected under present trends.

“The food crisis is another devastating effect and some estimates indicated more than 120 million people in Africa alone are suffering from food insecurity. They don’t have enough to eat and this is a very serious situation,” he added.

October 13, 2022
UNGA77: Buhari appeals for debt cancellation for Nigeria, other poor debtor nations

Nigeria’s President, Muhammadu Buhari, has appeled to the global community to consider “outright debt cancellation” for countries facing severe fiscal challenges.

The Nigerian leader made this appeal while speaking at the ongoing 77th United Nations General Assembly in New York.

In his words: “Nigeria, therefore, implores our global partners to do more to complement our endeavours.

“Indeed, the multifaceted challenges facing most developing countries have placed a debilitating chokehold on their fiscal space.

“This equally calls for the need to address the burden of unsustainable external debts by a global commitment to the expansion and extension of the debt service suspension initiative to countries facing fiscal and liquidity challenges as well as outright cancellation for countries facing the most severe challenges.”

President Buhari’s call for debt cancellation for developing countries with fiscal challenges comes as Nigeria’s debt profile continues to rise under his watch.

In nearly eight years under President Buhari, Nigeria’s debt profile has risen up to N42 trillion, according to the Debt Management Office.

With the present Nigerian government proposing to borrow over N11 trillion to fund the 2023 budget deficit, President Buhari regime will bequeath over N50 trillion debt on Nigeria when he leaves office next May.

President Buhari furthered assured the global community that he would leave a legacy of free, fair and transparent elections.

He told the assembly that Nigeria is committed to the “sanctity of constitutional term limits”, stressing that Nigeria has steadfastly adhered to democratic ethos.

President Buhari said Nigeria has worked to strengthen democracy and rule of law in the West African region.

He said: “In Nigeria, not only have we worked to strengthen our democracy, but we have supported it and promoted the rule of law in our sub-region.

“In The Gambia, we helped guarantee the first democratic transition since independence. In Guinea-Bissau, we stood by the democratically elected Government when it faced mutiny.

“And in the Republic of Chad, following the tragic death of its President, the late Idris Deby Itno in the battle field, we joined forces with its other neighbours and international partners to stabilize the country and encourage the peaceful transition to democracy, a process which is ongoing.

“We believe in the sanctity of constitutional term limits and we have steadfastly adhered to it in Nigeria. We have seen the corrosive impact on values when leaders elsewhere seek to change the rules to stay on in power. Indeed, we now are preparing for general elections in Nigeria next February.

“At the 78th UNGA, there will be a new face at this podium speaking for Nigeria. Ours is a vast country strengthened by its diversity and its common values of hard work, enduring faith and a sense of community.

“We have invested heavily to strengthen our framework for free and fair elections. I thank our partners for all the support that they have provided our election institutions.

“As President, I have set the goal that one of the enduring legacies I would like to leave is to entrench a process of free, fair and transparent and credible elections through which Nigerians elect leaders of their choice.”

September 22, 2022
Ozekhome lampoons FG over borrowing money to service debts

Constitutional lawyer and human rights activist, Chief Mike Ozekhome SAN, has decried the Federal Government’s borrowing money to service debts, saying “the present government has mortgaged our individual and collective future with reckless abandon”.

Ozekhome pointed out that the present Nigerian government now borrows money to service debts, “not payment of the real debt”, he added.

According to him, the next generations in Nigeria have mountainous debts hanging on their necks.

TheNewsGuru.com recalls that sometime in December 2021, the media reported that the Federal Government hopes to push its public debt stock to N50.22tn by 2023, with domestic debt at N28.75tn and external debt at N21.47tn.

“This is according to the projections in the National Development Plan 2021-2025. The Debt Management Office had disclosed that Nigeria’s public debt was N38tn as of the end of the third quarter of 2021, with the total debt stock rising by N2.540tn in three months from July to September 2021. This shows that the regime of the President, Major General Muhammadu Buhari (retd.), plans to accumulate about N12tn debt in two years from 2021 to 2023,” a publication stated.

Lamenting the present government’s money borrowing situation, Ozekhome recalled his analyzing Buhari’s first 50 days in office, in a piece titled, “Is president Buhari overwhelmed by serious issues of Governance?”.

In his words: “Today, Nigeria is in a terrible quagmire; a deadly dilemma; a complete culde sac. There is trouble; real trouble. In all aspects of life, Nigeria is sick. Very sick. Critically ill To say she is on an uneasy life–support machine is simply saying the obvious.

“Everywhere and everything are toxic. Even the air we breathe is toxic. It reeks of odious and smelly putrefaction from caked blood of innocent Nigerians split open by afternoon baking sun (apologies, Ayikwei Armah: “The beautiful Ones Are Not yet Born”).

“Our farmlands are death mines,laden with deadly booby-traps set up by rampaging Fulani herdsmen.They hug AK-47 riffles that spit fire on a daily basis against innocent farmers who have offered no provocation. The once-upon-a-time teeth-stained, kolanut-chewing, smiling and friendly herders moved harmlessly across the highways, footpaths and farmpaths.

“We, as children growing up in the 60s and 70s, usuallly came out to sing with our near national anthem rendition, to herald them in. What has happened? I don’t know. Or, do you? They have since turned into vicious, blood-sucking monsters that decimate our local population.

“Our song in those days was, “Malu koga, malu, koga, daba daba koga; ikpisa yeghe the akhia; edunu kpotha mho abo; ne the gbea kpu pku” (translated: “cows with hooves, cows with hooves; they are led by weak elderly men; men who carry sticks, with which they flog the cows kpu kpu”). We would come out of our huts, hailing them, giving them water to conserve in their pitchers made of cow skin and tied to their shoulders. Those were the good beautiful old days. Not anymore.

“Today, however, like in Wole Soyinka’s metamorphosis of Brother Jero in “Jero’s Metamorphosis” (1973), which followed “The trials of Brother Jero” (1963), these once innocent herders have metamorphosed into murderous and remorseless savages, killing, maiming, piling and raping farm owners and peaceful indigenous land owners right on their farms and in their homes, with gusto, eclat and a vainglorious sense of triumphalism.

“In our homes and on the roads, Nigerians are no longer safe. In the markets, schools, workplaces, air, train, waterways and forests, death stares the average Nigerian on his wrinkled face. Nigeria has become a grissly killing ground. She has become the poverty capital of the world, snatching the diadem from India. There is seering agony, mass disenchantment and grave disillusionment.

“Hunger and abject penury live with us. Melancholy and gnashing of teeth overwhelm Nigerians. Hopelessness and haplessness sleep with us on the same wretched beds. Hot tears, sorrow, pains, pangs and blood remain gods and goddesses in whose pulpits Nigerians worship in their homes.

“Schools are hurriedly and prematurely shut down, not from fixed holidays; not from unanswered ASUU’s 7 months strike engineered by a clueless government; but to prevent students from being abducted and kidnapped by rampaging armed bandits and kidnappers that operate as a state within a state.

“The government watches helplessly, wriggling its hands with shocking resignation to fate. Non-state actors now commonly challenge the sovereignty and suzereignty of Nigeria, planting their flags on Nigerian soils, collecting taxes, from, and giving citizens passes and identity cards. Armed bandits kidnap school children and instruct their parents to procure for them, large quantities of tarodo, tatashe, tomatoes, maggi, onions, garri, beans, rice, palm oil, vegetable oil, salt and other condiments. They need the ingredients to feed their children and keep them alive for ransom to be paid for their release. This is glaring evidence of a failed state.

“Fighting corruption, a mantra once hugged by this government, during political campaigns, has since graduated from a kindergarten school to a post graduate institution, strutting about unchallenged, like a proud peacock. Government appointees brazenly steal billions of dollars, with the EFCC and ICPC still busy pursuing ruling government’s political opponents.

“They use the ugly and primitively stolen money to mop up scarce Dollars, leaving to the present horrific artificial shortage of dollars, a situation of one dollar exchanging for about N740. And still counting. Didn’t this government meet the dollar at between M160 – N175 in 2015? Gosh! We are now No.148 out of 180, and the second most corrupt Nation in West Africa. Courtesy, Transparency International’s Anti-corruption Perception Index). Inflation increases geometrically.

“Nigeria has never been so polarized and divided along primordial ethnic, religious and linguistic cleavages. Nigerians from all works of life appear shell-shocked at a country they can no longer recognise within seven years of Buhari’s disastrous government. Well, I am not one of them. I had seen this ugly situation coming.

“Like Nostradamus, the man who saw tomorrow; like the Oracle at Ile-Ife that gazes into the future and pronounces a future Ooni, I saw these perilous times coming. I had predicated all these in the very first 50 days of this government.”

August 12, 2022