The Federal Government’s debt has risen by $18.40 billion (N3 trillion) in the last four years, according to the analysis of a Debt Management Office document.
The government also spent about $21 billion to service both foreign and domestic debts from 2010 to 2014, the DMO data revealed.
The debts were incurred to pay salaries and meet overheads at a time the economy was not in a recession.
According to the document, domestic debt consumed larger part of the amount spent by the government to pay interest on securitized debts.
The domestic debt servicing accumulated to $20.9 billion (N3.26 trillion) while the external debt servicing hit above a billion dollars.
In 2010, the federal government serviced the debt with $2.7 billion; 2011 with $3.78 billion; 2011 with $3.78 billion; 2012 with $4.92 billion; 2013 with $5.40 billion; and 2014 with $4.65 billion.
Records obtained from the Debt Management Office by Daily Trust revealed that Nigeria’s total public debt (external and securitized domestic debt of the federal government alone) has grown by $18.40 billion (N3 trillion) within the four years under focus.
In 2010, debt was $35.09 billion; 2011, $41.55 billion; 2012, $48.49 billion; 2013, $54.54 billion; and 2014, $53.49 billion. The current debt profile was a little higher than it was 10 years ago (2004) before Nigeria secured debt relief from the Paris Club.
In 2004, prior to the Paris Club debt relief, Nigeria’s overall debt stock was $46.2 billion which is $7.29 billion less than the current stocks.
In 2004, the external debt stood at $35.9 billion while the stock of the domestic debt amounted to $10.3 billion resulting in a total of about US$46.2 billion or 64.3 percent of GDP.
The document explained that the domestic debts are from securities such as Government Bonds, Treasury bills, Treasury Bonds, Development stock, Promissory Note.
The DMO said the increment was due to the additional borrowing from both external and domestic sources.
On the increase in the external debt, DMO said it was due to additional disbursements of existing loans and issuance of Eurobonds.
While on the domestic side, the debt managers said it was due to part funding of budget deficits and refinancing of maturity obligations.
However, an economist who want his identity protected said the high domestic debt accumulated due to the high interest paid on some of the securities issued by government.
He blamed the financial situation on finance ministry’s poor planning and reliance on bonds at very high yields just to finance recurrent expenditure.
He said the banks were no longer engaging in any productive ventures but relied on governments’ treasury bills and bonds which gave them at least 13 percent yield at ease.
According to him, there is no serious country that will give as high interest rate on its securities as that, except Nigeria.
“This is why government is spending so much in servicing debts through the nation’s budget and leaving capital expenditure with almost nothing. This is unsustainable; there is no serious economy that will rely on securities to meet its recurrent expenditure,” he added.
Niyi Ayoola-Daniels, president, International Institute of Petroleum, Energy Law and Policy (IIPELP), Abuja, on his own, said spending such amount on servicing debts was unacceptable and not sustainable.
“Government should as matter of urgency take more immediate measures to collapse this figure to one trillion. One of the greatest challenges facing the budget office of the federation is how to rebase expenditure profile to suit revenue profile” he added.
According to Ayoola-Daniels it is wrong to use debt to finance consumption. “You may use debt to finance production but not consumptions,” he said.
A professor of Economics and Director General of the West African Institute for Financial and Economic Management (WAIFEM), Akpan Hogan Ekpo, said the high debt profile was worrisome particularly given the declining oil revenues, the major source of revenue for government.
“What is worrisome is that, the debts were incurred to pay salaries and meet overheads when the economy was not in a recession,” he said
He added that the rising domestic debt calls for a moratorium on borrowing to finance recurrent expenditure.
“We need to know the status of infrastructural development which enjoyed intervention fund (debt) from government, among others.
“It is clear that the system had no concrete fiscal buffers. The system must drastically reduce wastages, block leakages and be innovative in raising revenue outside oil.”
“When we borrow to finance unviable projects, we are putting the future generation of Nigerians in debt. Let us not allow the future generation to abuse the current ones even when they are in their graves,” he said.
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