…Nigeria should be worried about the overall N55trn debt
Nigeria’s debt profile to the World Bank of 6 Trillion Naira is nothing to worry about for the country, a Public Finance and Policy Analyst, Segun Elemo has said.
He disclosed this in a media chat while speaking on the statement credited to the Debt Management Office that the 6 Trillion Naira Nigeria currently owes the World Bank is nothing to worry about.
Mr Elemo said the assertion by the Debt Management Office that the debt is nothing to worry about is true to a large extent because it is sourced mainly from the International Development Association Basket which comes with a very low interest rate compared to what obtains in Other loans basket of the bank.
He added that the tenor is also longer and oftentimes is a better option than domestic borrowing which comes with higher interest rates and shorter tenor.
He said the amount is very low compared to the nations’ overall debt to multilateral, private and Bilateral organisations.
He however said the nation should be more worried about the total debt overhang not just a little part of it which is little in comparison.
He said the nations revenue base needs to be strengthened so that government can wean itself off borrowing either external or local.
He said the fat and over-bloated subsidy regime which has gulped trillions over the last decade needs to be ended and revenue scaled up to ensure sustainability.
He added that the Ways and Means issue needs to be addressed with the Central Bank of Nigeria having gone beyond the regulations for borrowing to the Federal Government with it now standing at over 18 Trillion as at the last quarter of 2022.
He said when the Domestic Debt is combined with the External Debts Nigeria has an indebtedness of of over 55 Trillion in Debt.
He disclosed that the Debt Management Office has the Sole responsibility of managing the nations’ debt stock.
Going Further, he said the Federal Government has a lot of issues of development, poverty and infrastructure to attend to with a focus by the Buhari led administration on reflating the Economy through Infrastructure Development which will lead to provision of Employment opportunities to the Youth.
He disclosed that the decision was made by the President to borrow to finance a lot of the projects but said a proper cost analysis of the Infrastructure Financing and procurement model to the Citizens has to be made to know the true cost.
He however said the new and dangerous part of borrowing by the Federal Government is for consumption which include the 800 Million Dollars to cushion subsidy removal for Nigerians.
He advised that if the government should borrow at all for consumption it must be around what is internally generated so as not to create a major challenge going forward.
On if renegotiating loans will help in addressing the issue, he disclosed that no lending institution will due to inflationary trend come back to the table to renegotiate loans.
He said the newly elected President will in his experience of him expand the revenue base like he did in Lagos.
