Nigeria needs to lower its debt profile in order to make financial
resources available for priority projects, the Senate Committee on Local
and Foreign Debts has posited.
During a courtesy visit to the Vice President, Yemi Osinbajo, on
Monday, Chairman of the committee, Shehu Sani, said the country’s
borrowing which was heightened during the period of recession, needs to
be cut.
The lawmaker said the borrowings that followed the period of
recession was justified as the country needed to invest massively in
infrastructure, agriculture, mining and manufacturing, with multiplier
implication of increasing employment and reflating the economy.
He, however, maintained the need to check excessive borrowing.
“The country took up more borrowings, and gradually Nigeria’s total
debt stock has significantly increased, such that as at September 2017,
the nation’s total debt stock was put at $66.6 billion (or ₦20.3
trillion) as given by the DMO.
“Also, according to the DMO, as at June 2017, Nigeria’s spending on
debt servicing stood at 34.02 per cent of revenue, up from 33.94 per
cent recorded as at December 31, 2016,” he said.
The lawmaker harped on the need to make conscious effort at reducing the debt ratio.
“There is a clear need to lower this ratio in order to make financial
resources available for priority projects, for the benefit of
Nigerians.
“Understandably, there are growing concerns over the country’s rising
debt profile. Indeed, by the projections of the International Monetary
Fund (IMF), Nigeria’s debt to GDP ratio would surge by 100 per cent,
from 12.1 per cent in 2015 to 24.1 per cent in 2018. Also, the World
Bank had expressed concern over the debt payment to revenue ratio,
saying that reduced revenue earnings might render the country’s debt
unsustainable.”
He commended the Debt Management Office (DMO), which has Mr. Osinbajo
as Chairman of its Supervisory Board, for bringing ‘sanity’ into debt
management in the country.
“The recent drive by the Debt Management Office (DMO) to restructure
the nation’s debt profile, in favour of external borrowings, that are
usually at highly concessional interest rates, relative to domestic
borrowings, is indeed a welcome development and well appreciated by the
Committee. This was why the Senate and indeed the National Assembly
swiftly considered and approved the external borrowing to re-finance
maturing domestic debts through the issuance of USD 3.00 billion
Eurobond in the International Capital Market in 2017.
“The DMO must also continue to assist States of the Federation in the
managing and restructuring of their debts as a result of the failure of
many of these States to meet their financial obligations, while the
agency is commended for its efforts thus far in the successful
restructuring of N322.788 billion short term commercial bank debts of 11
States out of the 22 States that applied to it, into long term domestic
bond at 14.83 per cent yield, in 20 years.”
Mr. Sani said the committee has, since inception, been engaged in
oversight visits to project sites funded by local and foreign loans
obtained by the federal and state governments.
He urged the DMO executive to regularly provide detailed performance
report to the National Assembly, extract commitments from lending
agencies and governments for a significant increase in local and prevail
on the relevant agencies of government to negotiate the best possible
cost without compromising quality for projects to be financed by
government borrowings.