The Debt Management Office (DMO), yesterday explained how Nigeria’s public debt stock has been on the increase this year, necessitated by the government borrowing N1 trillion to subsidise premium motor spirit (PMS), commonly called petrol.
The Director-General, DMO, Patience Oniha, disclosed this in a presentation at the Executive Course on Budgeting and Fiscal Transparency at the Army Resource Centre in Abuja.
Oniha, who attributed the current high debt stock to budget deficit, noted that the borrowing plan for 2022 was increased by N1 trillion to enable the federal government to pay the extra cost of petrol subsidy due to revenue challenges.
Despite criticisms against the government’s borrowing, she said the public debt stock of $42.8 billion is still within acceptable limits and sustainable.
Speaking on, “Debt Sustainability Challenges and Strategic Revenue Mobilisation Initiative,” she said the DMO is deploying World Bank and International Monetary Fund tools to ensure the sustainability of Nigeria’s public debt.
Oniha said: “These tools include an annual Debt Sustainability Analysis (DSA) and a Medium Term Debt Management Strategy (MTDS) every four years.
“Maturities in the Public Debt Portfolio are well spread to avoid bunching of maturities and to ease repayments of maturing obligations. The Domestic Debt portfolio has securities with tenors ranging from 91 days to 30 years, while the External Debt Portfolio has securities ranging between 5 years to 30 years.”
The DMO is deploying World Bank and International Monetary Fund tools to ensure the sustainability of Nigeria’s public debt.
She noted out that while Nigeria’s debt to GDP ratio at 23.06%, is among the lowest globally, compared to countries like Angola (136.54%), South Africa (69.45%), Ghana (78.92%), United States (133.92%), and United Kingdom (104.47%) have higher ratios.
She however stressed that Nigeria was not alone in rising levels of public debts, as this is a global trend to enable governments to meet economic and social challenges posed by the COVID-19 pandemic and the Russia-Ukraine war.
“Governments across the world borrow. Globally, debt levels are growing, but it is not a new trend. Debt levels were already rising prior to COVID-19 crisis when compared to 2014. Globally, sovereign debt grew from 49% of GDP in 2014 to 57.9% in 2019 and in sub-Saharan Africa, from 35% of GDP in 2014 to 55% in 2019. In Nigeria, this ratio rose from 13% in 2014 to 19% in 2019,” she said.
According to the DMO boss, the Nigerian government was not just borrowing for its sake, the loans are to finance critical infrastructure with multiplier benefits (job creation, movement of persons and goods) and overall GDP growth.
She noted that the country was facing a revenue crisis, adding that it is imperative for the government at all levels to focus more on how to increase revenue generation as a means of reducing borrowing.
