Nigeria’s Debt Burden To Hit N38.68trn In 2021 – Finance Minister 

The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, on Tuesday said that Nigeria’s total public debt burden would hit about N38.68trn by December 2021.

Ahmed spoke during her presentation to the Senate Committee on Local and Foreign Debts.

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She added that, based on existing approval, the public debt stock would stand at an estimated N32.51trn by December 31, 2020.

She said, “The total public debt stock, comprising external and homes debts of the Federal and State Governments and the Federal Capital Territory stood at N31.01trn ($85.9bn) as at June 30, 2020.

“This is projected, based on existing approval, to rise to N32.51trn by December 31, 2020 and N38.68trn by December 31, 2021.”

She also disclosed that Sukuk fund was currently N162bn for 45 roads across the six geopolitical zones.

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Finance and Economic experts have repeatedly warned the Federal Government to reduce its current level of borrowing as a huge chunk of government revenue is currently being spent on debt servicing.

They told our correspondent that contrary to the position of the Federal Government that the problem facing Nigeria is in the area of revenue generation and not debt, the country currently has a debt problem.

The Lead Director, Centre for Social Justice, Eze Onyekpere, had said rather than continue to rely on borrowing to finance its activities, the Federal Government should adopt other sources of funding the infrastructure needs of the country

According to him, some of the areas government could use to free more funds for infrastructure development include reorganization of the National Housing Fund; establishment of a Road Fund and Road Management Authority to raise funds through toll gates, special surcharge on some commodities including fuel.

Others are reorganizing railway development to remove it as a federal monopoly so as to bring in private sector investments; and opening the window of investments into the electricity sector especially in transmission and distribution.

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He said, “The rising debt service of N2.45tn appears to be crowding out expenditure in critical infrastructure and human development.

“At the end of the day, if there is a shortfall in revenue, salaries and overheads will be drawn down, debts will be serviced whilst capital projects suffer.  

“At 23.74 per cent of overall expenditure, the debt service is high and it is higher than capital expenditure. When the Sinking Fund of N296bn is added to debt service, it comes up to N2.746tn which is 26.61 per cent of the overall budget.

On what could be done to check the high debt burden, he said, “The Federal Government should broaden the sources of revenue for budget and programme funding.

“Ultimately, these changes will relieve the Treasury of the undue burden of funding key infrastructure projects and as such, reduce the need for borrowing while the infrastructure still gets built.

“It will also reduce the demand for funds to pay back and service debts.”

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The Registrar Chartered Institute of Finance and Control of Nigeria, Mr Godwin Eohoi, said that with the Federal Government spending about 20 per cent of its budget size servicing the country’s debt, any further plan to increase the country’s debt profile may result into debt crisis.

He called on the government to discontinue borrowing in order to avoid the current situation where a huge chunk of the country’s annual budget is spent on debt servicing.

“Currently, what we are still doing is debt servicing using a huge proportion of the annual budget to pay debt. That is serious because the money that you would have used for other things is now being used to pay debt.

“The debt is still mounting and the servicing that we are doing is quite huge. We are using over 20 per cent of our budget to service debt.

“We should not even accumulate further debt beyond what we currently owe.”

Also speaking, a former Director-General, Abuja Chamber of Commerce and Industry  Mr Chijioke Ekechukwu, said the rising debt portends danger for the economy.

“It is expected that the debt profile of a country would rise considering the fact that we have a deficit budget and even the deficit side of the budget was  not met in the last budget year.

“The government would need to continue borrowing to meet the increased size of the deficit.

“Of course, the borrowing portends danger for the economy because our debt profile is rising and we do not know when we are going to scale it down,” he added.

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