Several years after this country was supposed to have exited from the international debt trap, the Federal Government spent $1.486 billion to service the nation's foreign debt in 2007 and 2008, a document obtained from the Debt Management Office (DMO) at the weekend has shown.
The debt stock of Nigeria is currently put at $3.7 billion. Minister of Finance Dr. Mansur Mukhtar has said that out of the total foreign debt stock, $3.2 billion is owed to the World Bank. $1.022 was spent in 2007 to service the debt, while $464.63 million was used for the same purpose in 2008.
A breakdown of the payments showed that in 2007, the World Bank Group was paid $237.70 million, while the African Development Bank (AfDB) and African Development Fund (AfDF) got $139.26 million and $4.24 million respectively.
The European Investment Bank (EIB) and the European Development Fund (EDF) got $3.87 million and $7.70 million respectively. $27 million was paid to Non-Paris Club, while the London Club got $102.59 million.
Still in 2007, $476.60 million and $22.60 million were paid as promissory and commercial notes respectively for private creditors.
In 2008, $380.63 million was used to service debt owed to multilateral agencies which include IBRD ($204.36m), AfDB ($126.86m) and IFAD ($1.85m). AfDB, IDA and EDF got $4.60 million, $37.17 million and $5.79 million respectively.
The London Club was paid $41.72 million as oil warrant in 2008, while Non-Paris Club such as Exim Bank of China and Exim Bank of Korea were paid $5.44 million and $1.19 million respectively. The same year, debt owed to the Non-Paris Commercial was serviced to the tune of $35.63 million.
Meanwhile, the Debt Management Office has prescribed a national borrowing limit for the three tiers of government in order to ensure overall debt sustainability. DMO's Director General Dr. Abraham Nwankwo said debts owed by three tiers of government including foreign and domestic debts should not exceed 45 per cent of the nation's Gross Domestic Product (GDP).
He said the country's debt is presently less than 12 percent of the annual GDP. He said this Friday in Abuja when he hosted the Secretary General of the Commonwealth, Mr. Kamalesh Sharma. He put the country's domestic debt at N2.3 trillion and foreign debt at $3.7 billion.
He also told the Commonwealth secretary that the 36 states of the federation account for 40 per cent of the current external debts while the Federal Government accounts for the remaining 60 per cent.
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The $1.5b to service just over $3b debt annualy could have been used to improve the infra structure in the country if excess crude oil money were used instead of putting the country in debt. President Yar'Adua should be told by Nigerians that HE SHOULD STOP DISTRIBUTING EXCESS CRUDE MONEY TO HIS FRIENDS TO LIMIT THIS HIGH DEBT SERVICE PAYMENT BY THE COUNTRY.
I am not an economist, but if the news line is right, that means we are paying ridiculous interest rates to the World bank, and this would seem like an elaborate scheme to keep us in debt. The elite econmista of the country esp thouse in the government and finance industry should get their heads out of their pockets and try to analyse what kind of debt would require such a high interest rate. Either this is a huge ripoff ...or this peice of news is a big fat lie...knowing Nigeria and journalists(bad combination), that would hardly be surprising.