Nigeria's debt of $85.9 billion, the highest in history, has become the talking point even as the country celebrates its 60th anniversary.
The pressure on the economy has caused an 8.31 per cent increase in debt owed from the total of $79.3 billion recorded in March. By December 2005, Nigeria was rated as one of the most heavily indebted countries, owing $33.9 billion.
Now the talk is on whether the money borrowed had helped or burdened the country.
Abuja’s debt obligation had gone down in 2006 after the country got debt relief. The Paris Club of creditors wrote off $18 billion of that debt, while the country paid off the balance and became largely debt-free.
However, in the years that followed, the public debt spiralled as officials argued for funding budget deficits and critical infrastructure.
According to the National Bureau of Statistics, 34.89 per cent of the total federal and state public debt is external while domestic accounts for 65.11 per cent.
The Debt Management Office (DMO) reported that the increase by $6.593 billion was accounted for by the $3.36 billion budget support loan from the International Monetary Fund, new domestic borrowing to finance the revised 2020 Appropriation Act, including the issuance of Sukuk, and Promissory Notes issued to settle claims of exporters.
The nation’s 2020 Appropriation Act had to be revised in the face of the adverse impact of Covid-19 on revenues and increased expenditure needs on health and economic stimulus amongst others, DMO explained.
In spite of DMO’s reasoning, some stakeholders are concerned that Nigeria remained dependent on oil as the sole revenue generating resource for such a long time without diversification to other revenue generating sources.
Former Vice President Atiku Abubakar raised the stakes when he accused government of mortgaging the future of Nigerians and having nothing to show for amassing such debt.
“Nigeria’s sovereignty may have been traded for foreign loans and God forbids our inability to service those loans, the lender country would take ownership of choice infrastructure on the Nigerian soil,” he said.
President of the Progressive Shareholders Association of Nigeria, Boniface Okezie, says the debt stock is cause for worry due to the government’s declining revenue.
Disagreeing with critics, Information and Culture minister, Lai Mohammed, said the ratio of debt to GDP was one of the lowest in the world at 19 per cent as at December 31, 2019.
Unlike in the past when the nation borrowed to “service the crass indulgence of a few fat cats”, the loans being obtained by the current administration were being primarily used to finance infrastructure — roads, railways, bridges and power.
He added that the loans also were long-term in nature, which would benefit present and future generations.
President Muhammadu Buhari on September 28, at a virtual meeting with Presidential Economic Advisory Council, justified the borrowing.