Nigeria borrows N20trn in six years

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Concerns by stakeholders, experts, and ordinary Nigerians over the country’s rising public debt are mounting.

The anxiety comes at a time when the country utilizes a large chunk of its revenue to service debts.

For instance, in the 2021Appropriation Act, the Federal Government budgeted N3.12 trillion for debt servicing out of projected revenue of N7.89 trillion.

Similarly, in a report of the budget implementation of the government which ended in December 2020, the total federal revenue earned by in 2020 amounted to N3.93 trillion.

The figures mean that the federal government recorded a 27% drop from the target revenue of N5.365 trillion.

However, to the amusement of many experts and stakeholders, debt service for the year was put at N3.26 trillion which represents about 82.9% of the total revenue earned in 2020.

In another development, the Senate again approved fresh external loans of N1.02 trillion ($1.5 billion and €995 million) for the Federal Government.

This followed a letter written to the upper legislative chamber by the President in May last year to grant permission to borrow the said amount.

After considering the report of the Clifford Ordia-led committee on local and foreign debts, the loan request was approved on Wednesday, 21st April 2021.

Timeline of borrowings under Buhari

An analysis of rising debt under President Buhari by The Daily Times shows that the public debt stock of the country has risen from N12.118 trillion in 2015 when Buhari assumed office to N32.89 trillion in 2021.

This represents over 160% increase in public debt profile Official figures from the debt management office shows that Niigeria’s debt grew from N12.118 trillion in May 2015 to N12.6 trillion in December 2015,

In 2016, it jumped to N17.36 trillion, then N21.725 trillion in 2017, N24.387 trillion in 2018 and N27.401 trillion in 2019.

Subsequently, the figure went further to N29 trillion in the year 2020 Major funders of these loans include the World Bank, International Monetary Fund (IMF) Chinese Exim Bank and the African Development Bank (AfDB).

Only recently, the federal government sourced a $3.4 billion loan from the IMF, $2.5 billion from the World Bank, $1 billion from the AfDB, as well as N850 billion domestic capital market loans among others.No cause for alarm – DMO

Recall that the Debt Management Office announced that Nigeria’s public debt as at end of 2020 stood N32.915 trillion.

The DMO attributed the rise to the harsh economic challenges caused by the Covid-19 pandemic which has also forced advanced countries to increase their level of borrowing.

Nigeria’s public debt stock comprises that of federal and state governments as well as the Federal Capital Territory.

The DMO was however emphatic that the borrowing of the country was not under any threat as it was still within its limit.

“Total Public Debt to Gross Domestic Product as at December 31, 2020 was 21.61% which is within Nigeria’s new Limit of 40%.

The various initiatives of Government to increase revenues such as the Strategic Revenue Growth Initiative and the Finance Act, 2020, should help shore up Government’s revenue and reduce the Debt Service to Revenue Ratio,” the DMO added.