Nigeria’s Minister of Foreign Affairs, Yusuf Tuggar, has sought to allay concerns over the country’s rising debt-to-GDP ratio, insisting that the nation remains financially stable. Despite the escalating debt burden, Tuggar maintains that Nigeria’s economic fundamentals are sound, and its debt profile does not place it in a precarious situation compared to other developing nations.
The recent statement by Nigeria’s Foreign Affairs Minister, Yusuf Tuggar, regarding the country’s debt-to-GDP ratio has sparked discussions among economists and policymakers. While the Minister maintains that Nigeria’s debt burden is manageable, concerns persist about the implications of the rising debt levels for the nation’s economic stability and development.
During an interview with Channels TV, Tuggar asserts that Nigeria is not among the critically indebted nations is partially supported by data from the Debt Management Office (DMO).
“When it comes to the issue of debt, look at the debt-to-GDP ratio of Nigeria, we are not even among the critically indebted nations,” Tuggar said.
According to the DMO, the country’s public debt currently stands at N121 trillion, comprising N65.6 trillion in domestic debt and $42.1 billion in foreign debt. While this represents a substantial increase from previous years, Nigeria’s debt-to-GDP ratio, although surpassing the 50% mark, remains below that of many other developing countries.
However, the growing debt burden raises concerns about the country’s ability to service its debt obligations and allocate resources to critical sectors such as education, healthcare, and infrastructure. The rising cost of debt servicing can divert funds away from essential public services, potentially exacerbating poverty and inequality.
Debt Forgiveness: A Global Issue
One of the key topics discussed at the 79th session of the United Nations General Assembly (UNGA 79) was debt forgiveness for developing countries. Tuggar emphasized that Nigeria is not seeking debt forgiveness for itself alone but is advocating for a broader solution to the global debt crisis, particularly for countries in the global south.
“What you’re failing to take into consideration is when we talk about debt forgiveness, we are not necessarily referring to ourselves.”
“Nigeria is considered a leading nation, not just on the African continent but in the global south. When we speak, we speak on behalf of Africa, we speak on behalf of developing nations, we speak on behalf of the global south. And we speak as the largest black nation on earth,” Tuggar added.
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The issue of debt forgiveness has gained traction in recent years as many developing nations grapple with the challenges of servicing their debt obligations while also investing in economic growth and development. The COVID-19 pandemic has further exacerbated these challenges, as many countries have had to borrow heavily to support their economies during the crisis.
While the prospects for widespread debt forgiveness remain uncertain, Nigeria’s advocacy for a global solution to the debt crisis is a significant step towards addressing this pressing issue. By speaking on behalf of developing nations, Nigeria is helping to raise awareness of the challenges faced by these countries and to build a coalition of support for debt relief measures.
The Informal Sector: A Key Economic Driver
Tuggar also highlighted the importance of the informal sector in Nigeria’s economy. He noted that if the informal sector were accurately captured and included in GDP calculations, Nigeria would have the highest GDP in Africa. The National Bureau of Statistics (NBS) is currently working to rebase the GDP to include the informal sector, which contributes a significant portion of the country’s economic activities.
“Nigeria is the largest economy by GDP in Africa. The National Bureau of Statistics (NBS) is in the process of rebasing our economy. Look at the side of our informal sector that is not been included in the measure of GDP. While we are discussing facts, let’s put aside the self-flagellation.
“We don’t have to keep pushing ourselves down when the world looks at us differently. I’m not saying we should not have constructive criticism,” Tuggar said.
The informal sector plays a crucial role in providing employment opportunities and generating income for millions of Nigerians. However, it also faces numerous challenges, including limited access to credit, inadequate infrastructure, and regulatory hurdles. By recognizing the importance of the informal sector and working to integrate it into the formal economy, Nigeria can unlock its full economic potential.
International Support for Nigeria
Despite the growing debt burden, Nigeria continues to attract international support and investment. Tuggar has revealed that countries like China are willing to extend more loans to Nigeria for infrastructure development and other projects. This indicates that Nigeria’s economic potential remains attractive to foreign investors, despite the challenges posed by its debt profile.
“When we talk about debt of a developing country, Nigeria is not in that sort of precarious situation. As a matter of fact, China is prepared to lend more. China is prepared to invest more in Nigeria in terms of infrastructure, development, and other things.”
If You Ask Me
Nigeria’s rising debt burden raises concerns about its economic stability and development. While the Foreign Affairs Minister maintains that the country’s debt-to-GDP ratio is manageable, there is a need for careful consideration of the implications of the growing debt levels.
In addition to addressing the debt issue, Nigeria is also advocating for debt forgiveness for developing countries and working to integrate the informal sector into the formal economy. By taking a comprehensive approach to these challenges, Nigeria can position itself for sustainable growth and development.
