The Debt Management Office (DMO) has on Thursday confirmed that Nigeria’s debt profile as of March 2022 is N41.60 trillion.
This was confirmed by the Director General of Debt Management Office, Ms. Patience Oniha, who spoke during the ongoing engagement on the 2023- 2025 Medium Term Expenditure Framework (MTEF) and Fiscal Policy Paper (FSP) at the House Committee on Finance.
Oniha said as at December, 2020 the debt stock stood at 32.92 per cent and rose to 39.55 percent as at 31st December, 2021.
According to her: “as at December 2020, the debt stock of Nigeria which includes the federal government, state governments and the federal capital territory was N32.92 trillion. By December 2021, it was N39.556 trillion. As at March of this year, it was N41.6triilion.
“On the average, Federal Government debt stood at about 85 percent of the total. Technically, the bulk of our debt is owed by the federal government.
“Debt has grown and that has come from the annual budget. There are 3 levels where those borrowings have increased. We have been running deficit budget for many, many years.
“So, each time you approve a budget with a deficit, you approve it giving us a mandate, an authority to borrow and it will reflect in the debt stock, so debt stock will increase. Also remember that States are also borrowing, so we add their own. They also have laws governing their borrowings.
“The second leg to that really is that as debt stock increases, debt service will also increase. So, the clear message is for us to go through the budget because we have been having deficit budget for many years and have been borrowing significantly. While responding to question on the actual debt stock for the federal and subnational governments, she disclosed that 85 percent of the total debt stock is owed by Federal Government while about 15 percent are owed by the State Governments and Federal Capital Territory (FCT).
“From the COVID period in 2020, the level of borrowing had increased significantly as you know. Those budgets pass through this House. The issue is how do we reduce that debt. One of it is revenues which we have talked about.
“So, if revenue is high, your deficit will be lower and new borrowing will be lower and then your new borrowing will be less and your debt stock will be lower and debt service to revenue will now be so high.
“So, the challenge is, we have been borrowing because of shortfalls. The other thing to do is to look at our expenditure profile. What can we do to reduce it because you are asking me what is the remedy? It is coming from the budget.
“There is revenue, there is expenditure listed in various categories, personnel, overhead and capital. So, those are what bring out the deficit we borrow for. It is those things that should be interrogated in addition to increasing revenue significantly.
“Let me say that a World Bank report just show that in terms of debt to GDP ratio, Nigeria is low but for debt service to revenue ration, we are very high. So, if you look at tax to GDP ratio of these other countries, they are in multiples of Nigeria.
“The World Bank did a survey of about 197 countries and Nigeria is listed as number 195. That mean we beat only two countries and these countries are Yemen and Afghanistan and I don’t think we want to be at those places.
“We can’t talk about borrowing without talking about revenues and we can’t say why is the debt stock growing? It’s growing because we are running deficit budget and some of you may be aware that we are also issuing promissory note to refinance arrears of government which also comes to the National Assembly for approvals.” she said.