Director General of Debt Management Office, (DMO), Abraham Nwankwo, on Monday in Abuja put the nation’s external debt stock at $9.16 billion, a 3.9 per cent growth over the $8.82 billion reported at the end of December 2013.
Domestic debt also soared to N8.7 trillion as at March 2014, he said, up by N1.56 trillion or 22.19 per cent, compared with the N7.12 trillion reported at the end of December.
Okogwu, who spoke when he appeared before the Committee on Public Finance at the ongoing National Conference in Abuja, said 32 per cent of the external component of the debt figure was owed by states, pointing out that the Federal Government owes 68 per cent.
He also noted that 17 per cent of local debt accrued from states while the Federal Government generated 82 per cent of the debts.
Okogwu told the committee that the local debt did not include the local contractors debt, adding that any foreign institution which gave loan to any state without the approval of the National Assembly was doing so at its own risk.
Giving further explanation on the necessity of borrowing funds, Okogwu told the committee members that borrowing has been part and parcel of every modern economy, stressing that prosperous nations like Britain, Germany, among others also borrow funds to sustain their economy.
Meanwhile, commenting on the debt figure in its daily economic commentary, ‘Goodmorning Nigeria’, analysts at Lagos-based FBN Capital Limited explained on Monday that “the increase in naira terms in the first quarter was just N60 billion”.
“The burden rises to 10.7 per cent, when we include the FGN’s external debt. The positive transformation of the indebtedness ratios is due of course to the recent release of the rebased national accounts by the National Bureau of Statistics (NBS), which resulted in an 89 per cent increase in provisional nominal GDP.”
The debt, the report added, represents only the sovereign obligations, and excludes the debt of the Assets Management Corporation of Nigeria (held by the CBN), the Nigerian National Petroleum Corporation (NNPC) and other public agencies, and the state governments.
“We estimate the latter at N1.75 trillion and the burden for the widest measure of public debt at 25 per cent of revised 2013 GDP,” FBN Capital added, noting that the increase in FGN domestic debt is often substantial in the first quarter due to familiar budget delays “so we regard N60 billion as an achievement”.
The report also noted “some concerns in the market that the new ratios will encourage the FGN to embark on a borrowing spree ahead of the elections in 2015”.
“We play down this possibility. We note that the FGN has a medium-term target of a 60/40 mix of domestic and external obligations in its debt profile, compared with the current 83/17 blend.
“We also note that Nigeria, unlike Ghana, does not embrace fiscal irresponsibility according to the electoral calendar.”
Source: Daily Independent (by Innocent Oweh)
