Nigeria’s Federal Government has justified the nation’s debt profile put at $83.883 billion, saying there is no cause for alarm as the country has a debt ceiling of 25% in the total public debt stock to Gross Domestic Product (Debt/GDP), which it has operated within.
Country’s Minister of Information and Culture, Lai Mohammed is upbeat that there is nothing to worry about, but frowns at recent concerns in certain circles about the country’s growing debt, both domestic and external, with lots of misrepresentations and scare mongering.
“We therefore believe it is important to put things in the right perspective, so our citizens will be well informed: The public debt stock is actually a cumulative figure of borrowings by successive governments over many years. It is therefore not appropriate to attribute the public debt stock to one administration.
“Nigeria’s total public debt stock in 2015 was $63.80 billion, comprising $10.31 billion of external debt and $53.49 billion domestic debt. By June 2019, the total debt stock was $83.883 billion, made up of $27.163 billion of external debt and $56.720 billion domestic debt. It is therefore not correct to say that Nigeria’s external debt alone
is $81.274 billion.
“There is yet no cause for alarm. This is because Nigeria has a debt ceiling of 25% in the total public debt stock to Gross Domestic Product (Debt/GDP), which it has operated within. The ratio for Dec. 31 2018 and June 30 2019 were 19.09% and 18.99% respectively,” he discloses.
Mohammed, however, says the debt service to revenue ratio has been higher than desirable, hence the push by the government to diversify the economy and increase oil and non-oil revenues significantly.
“The government is also widening the tax base to capture more tax-paying citizens. In the face of massive infrastructural decay, no responsible government will sit by and do nothing. This Administration’s borrowing, therefore, is aimed at revamping our infrastructure, including roads, bridges, railways, waterways and power, to help
unleash the potential of the nation’s economy,” he adds.
He states that the loans for the educational sector will contribute to the development of human capital while the loans for the agricultural sector will help the move to diversify the economy.
On nation’s economy, he feels it has continued to witness a strong performance, building on the steady recovery seen since the last recession, saying that that the overall growth sees the nation’s economy growing at an average rate of 2.2% over the first three quarters, compared to 1.7% over the same period in 2018.
He explains that both the oil and non-oil sectors performed considerably better in 2019 than in 2018, as the oil sector grew at an average of 4% over the three quarters, compared to 2.4% in 2018, while the non-oil sector grew by 2%, compared to 1.7% in 2018, adding that the average daily oil production level rose to its highest in the last three years, reaching two million barrels per day (mbpd) in 2019, compared to 1.8 mbpd in 2016, and 1.9 mbpd in both
2017 and 2018.
“In particular, in the third quarter of 2019, the major growth drivers were: Information and communications,
agriculture, mining & quarrying, transportation & storage as well as manufacturing, all of which have seen considerable focus by government. In the third quarter of 2019, a total of 34 economic activities witnessed positive expansion, same as in 2018.
“The trends indicate that overall macro-economic stability is being achieved, with inflation rate steadily trending
downwards. Year-on-year headline inflation rate declined steadily from 15.1% in January 2018 to 11.9% in November 2019. Year-on-year core inflation rate slowed from 12.1% to 9% between January last year and November this year. Year-on-year food inflation rate decreased from 18.9% in January 2018 to 14.5% in November 2019,” he reveals.