CEM REPORT | The Nigerian total debt as at December 2021 stands at N39.56 Trilliion according to the data from the Debt Management Office.
The total government debt rose from N32.915 trillion in December 2022 with accumulation of N6.64 trillion within the 12 months under review representing a 20.17% increase.
External debts occupy 40.08% of the total to the tune of 15.855 trillion of which Federal Government owe N13.88 trillion representing 35.10%, while States and the FCT are responsible for N1.97 trillion representing 4.98%
According to the DMO document, Domestic Debts stands at N23.70 trillion representing 59.92%. Federal Government owes N19.24 trillion (48.65%) while States and FCT owe N4.458 trillion.
Meanwhile, the Director-General of the Debt Management Office, Patience Oniha, said Thursday in an interview with the News Agency of Nigeria, that borrowings by countries to finance budget deficits and critical infrastructure is not necessarily bad.
She spoke on the sideline of an awareness programme on security issuance organised by her office.
Oniha said that government borrowings were done by all countries across the world, mostly to finance critical infrastructure.
According to her, the multiplier effects of quality infrastructure on a country’s economy cannot be quantified.
She said that successive Nigerian governments have had to recourse to borrowing to fund budget deficits, adding that annual budgets would be affected if funds were not raised to support them.
“The issue of debt has become topical in Nigeria that sometimes it almost looks as if borrowing is an offence or a crime.
“The first thing we must understand is that countries across the world borrow, be it poor countries, advanced countries, developed countries, emerging markets. They all borrow.
“We usually hear complaints that debt levels are rising in Nigeria. Globally, debt levels are rising, not just in Nigeria”; she said.
The director-general said that the advent of COVID-19 had also made borrowing imperative for some countries.
“What has happened with COVID-19 is that countries needed to spend more, not only on health needs but on social needs as well, because we need to take care of people who are losing their jobs.
“We need to create incentives for the private sector to continue operating in order to avoid a big recession because most countries experienced recession.
“We did as well, but we came out of it after two quarters. Government spending is one of the tools you can use properly to exit recession.
“In Nigeria, we borrow to finance budget deficits, sometimes we borrow to finance specific projects and services like railways and airports. Financing infrastructure is an economy itself. It creates jobs across all sectors.
“We also borrow to finance maturing loan obligations like the Federal Government of Nigeria (FGN) bonds and Nigeria Treasury Bills,” she said.
According to her, there are statutory laws that regulate borrowings by governments at the various levels, and also prevent abuse of the process.
“The Fiscal Responsibility Act states that borrowing should be for capital purposes and for human capital development. The DMO Act is also clear, especially on external borrowings.
“No arm of government can borrow on its own. It has to comform with those provisions and pass through the Federal Executive Council and the National Assembly.
“There is also a fiscal responsibility for the state governments to ensure that the reforms at the centre also happen in the states”; Oniha said.