Nigeria's Debt Hits N35.5trn, APC Defends Borrowing

16 September 2021

The national leadership of the All Progressives Congress (APC) has backed the continued borrowing by the federal government, saying it is for the good of the country.

This is just as Nigeria's total public debt rose to N35.46 trillion as of June this year, a situation that has got many Nigerians worried that the country was entering into another debt trap.

But the national secretary of the Caretaker/Extraordinary Convention Planning Committee (CECPC) of APC, John James Akpanudoedehe, defended the APC-led federal government borrowing in response to the main opposition Peoples Democratic Party (PDP) which accused President Muhammadu Buhari administration of mortgaging the nation's future.

Akpanudoedehe said the money borrowed by the federal government is being used to develop critical infrastructure that is stimulating economic growth, generating jobs, reducing poverty and improving the general well-being of the citizenry.

He said unlike in the brazen looting days of the PDP, the borrowings are designed to finance the deficit in the 2021 budget to enable the realisation of the Nigerian Economic Sustainability Plan that touches key sectors such as infrastructure development, boosting healthcare services, strengthening agriculture to enhance food security, more energy generation and continued tackling of the ravaging COVID-19 global pandemic.

"From the foregoing, it is abundantly clear that the borrowing is hinged on genuine needs and based on the necessity to strengthen the foundation of the national economy and achieve the desired primary purpose of the government of lifting the living standard of the citizens.

"It was in PDP's era that loans to fund power generation and purchase arms and ammunition to fight a raging insurgency were misappropriated and diverted to fund PDP activities, and the borrowed money ultimately found its way to the pockets of cronies, friends and family members of administration officials. Nigeria is still servicing a $460 million loan taken from China to fund a phony Abuja Closed-Circuit Television (CCTV) contract awarded in August 2010.

"Nigerians should also reflect and recall that the PDP had, in its 16 years of misrule, pushed the country into a dark ditch of insolvency, and a period in which most state governments could not pay workers' salaries, not even the minimum wage, or settle contractors' bills and cater for patients in hospitals, to name a few."

According to him, in a commendable change, the Buhari-led administration through its economic management skills bailed out states to pay salary backlogs and embarked on large-scale infrastructure development projects that stimulated the economy and exited the era of insolvency and recession caused by the ineptitude of the PDP administration.

He added that the APC appreciated the continued and multi-partisan cooperation which exists between the executive and legislature on national issues, saying it will ensure good governance particularly in the area of economic development, with the country and citizens the ultimate beneficiaries.

Meanwhile, according to the Debt Management Office (DMO), Nigeria's total public debt rose to N35.46 trillion as of June this year. Total public debt is the domestic and external debts of the federal government, 36 state governments and the Federal Capital Territory (FCT).

Between December 31, 2020 and June 30, 2021, the total public debt stock grew by 7.75 per cent.

Director-general of the debt office, Patience Oniha, made the disclosure during a presentation of the nation's debt profile in Abuja.

On the domestic front, federal and sub-national governments owe N21.754 trillion, representing 61.34 per cent, while N13.711 trillion is owed to foreign borrowers including China, the World Bank and IMF drawdown.

The federal government has a maximum share of the debt at 83.07 per cent, while the states and FCT owe 16.93 per cent.

A breakdown of the external debt shows multilateral debts (World Bank Group, AfDB Group) represent 54.88 per cent; bilateral debts (China, France, Japan, India, Germany) are 12.70 per cent; commercial (Eurobonds, diaspora Bond) 31.88 per cent, and promissory notes, 0.54 per cent.

Loan from China is 27 per cent of the total external debt, with bilateral and multilateral segments of the external debt accounting for the higher percentage of the foreign debt stock.

Oniha said the government's overdraft to the Central Bank of Nigeria (CBN) through ways and means was started at N10 trillion, but was not specific on the current amount of the government overdraft collection. She said plans are on the way to formally convert the overdraft to debt.

When that is done and the borrowing plans in the medium-term expenditure framework are done, Nigeria's debt to Gross Domestic Product is estimated to rise to about 35 per cent. The federal government set a 40 per cent threshold as debt to GDP ratio for itself.

On the issue of the rising public debt, Oniha said government borrowings are project-tied. She said Nigeria's Eurobond has many benefits for the nation's economy and capital market.

The DMO boss said issuing Eurobonds has been a potent tool for building up Nigeria's external reserves, noting that a healthy level of external reserves supports the Naira exchange rate and Nigeria's sovereign rating.

"We have built up Nigeria reserves with the issuance of our Eurobonds," she stated, adding that raising funds externally through Eurobonds to finance budget deficits reduces the level of sovereign borrowing in the domestic markets.

Saying there is no point to panic over the increasing debt rate, Oniha said the only way Nigeria can stop borrowing is to generate more revenue to make up for the deficit in the national budget and still build infrastructure.

LEADERSHIP had reported yesterday that the House Representatives had received a communication from President Muhammadu Buhari seeking approval of $4.054 billion and £710 million fresh external loans to fund projects captured under the 2018-2021 borrowing plan.

This is just as the House received communication from the president on the Control of Small Arms and Light Weapons Bill 2021 and the Explosives Bill 2021.

The president is also seeking approval for grant components of $125 million in the 2018-2021 external rolling borrowing plan.

President Buhari, in the fresh request read by the Speaker, Femi Gbajabiamila, explained that the projects listed in the 2018-2021 Federal Government Borrowing Plan were to be financed through sovereign loans from the World Bank, French Development Agency (AFD), China-Exim Bank, International Fund for Agricultural Development (IFAD), Credit Suisse Group and Standard Chartered/China Export and Credit (SINOSURE) in the total sum of $4,054,476,863.00, €710 million and grant component of $125 million.

Senate To Pass 2022-2024 MTEF/FSP Next Week

Meanwhile, the Nigerian Senate is set to pass the 2022-2024 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) next week.

The Senate had yesterday stepped down the presentation and consideration of the 2022-2024 MTEF/FSP and adjourned till Tuesday next week.

The decision to defer the MTEF/FSP presentation and consideration was reached during plenary following a motion moved by Senate Leader Yahaya Abdullahi and seconded by the Minority Leader Eyinnaya Abaribe.

Abdullahi explained that the report on the 2022-2024 MTEF/FSP needed further legislative work by the Joint Committees on Finance, National Planning, Foreign and Local Debts, Banking, Insurance and Other Financial Institutions, Petroleum Resources (Upstream), Downstream Petroleum Sector and Gas.

According to the lawmaker, "The document needs further deliberation on and, therefore, needs to be fine-tuned."

The presentation of the report was, thereafter, stepped down to allow the Joint Committee to conclude further work on it.

LEADERSHIP reports that with the need to commence the process for the presentation and consideration of the 2022 appropriation bill, the MTEF/FSP would be passed next week.

Also yesterday, the Senate president, Ahmad Lawan, referred to the Senate on Committee on National Planning a request by President Muhammadu Buhari to confirm the nomination of Abdulazeez Idris King as commissioner representing Kogi State in the Revenue Mobilisation Allocation and Fiscal Commission.

The nomination of Amaechi Nwoha as commissioner representing South East in the National Assembly Service Commission was also referred to the Committee on Establishment and Public Service.

Both nominees are expected to appear before the relevant committees for screening.

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