CEM REPORT, FINANCE | The debt management office has identified the country’s inability to take advantage of the recent hike in crude oil prices as a major contributor to the current debt situation.
This is as the office also frowned at the inability of the government to raise revenue while embarking on big budgets.
The Director General of the Debt Management Office (DMO), Patience Oniha, appearing before the House of Representatives Committee on Aids, Loans and Debt Management on Monday in Abuja stated that the country must look at both revenue and expenditure to address the surging debt profile.
“If all we did was produce our quota of crude oil, we would be in a surplus— oil price doubled the budgeted price.
“It is also probably possible to start looking at the expenditure, if you cannot afford it, or can only afford it through large borrowing, you may have to reconsider. I agree with you (lawmakers) that our budget size is small, relative to our GDP.”
Oniha also informed the lawmakers that Eurobond is not an option because of the global uncertainty due to the Russia-Ukraine war.
She said that most creditors are focusing on the US and other AA rate markets adding that those investors have a limit in terms of the risk they can take.
“Before you could go to Eurobonds and raise funds, we don’t know when the world would recover. Already, the UK is talking about recession and we don’t know who else. I think it is strategic for us, as a nation, beyond the DMO, we have to look for revenue.”
She added that in Africa, only Nigeria and Egypt have issued Eurobonds recently, adding that no other country in the continent has been able to raise money from Eurobonds.
Recall that last month, President Muhammadu Buhari presented a budget of N20.51 trillion to the joint session of the National Assembly for 2023. The proposed budget has a deficit of N10.78 trillion.
According to the DMO, as of June 2022, the total total-public-debt of the federation was $103.3 billion.
Despite the 1.830 million barrels per day quota approved by OPEC, Nigeria has repeatedly failed to meet the quota due to oil theft and the vernalisation of pipelines.