2023 Budget to Take Nigeria’s Debt to N77 Trillion 

“The country’s debt profile under President Buhari is in stark contrast with that of President Olusegun Obasanjo who met a debt of $35 billion and paid off $30 billion from the country’s debt”. 

Nigeria’s public debt profile would hit 77 trillion naira by May 2023. Patience Oniha, DG of the Debt Management Office, made this statement during a public presentation of the 2023 budget by Minister of Finance, Budget and National Planning, Dr. Zainab Ahmed.  

According to Oniha, the N77 trillion will comprise the N22.7 trillion Ways and Means Advances borrowed from the CBN between 2014 till 2022, plus the N44.06 trillion debt stock as of September 2022 added to the N8 trillion new borrowings in the 2023 budget. In 2022, the FG spent N5.24 trillion servicing debt.

Ms. Oniha said in a statement, “… there is a lot of discussion on the Ways and Means. In addition to the significant cost saving in loan service, we would get by securitizing it, there is an element of transparency in the sense that it is now reflected in the public debt stock. Once it is passed by the National Assembly, it means we will be seeing that figure included in the public debt. You will see a significant increase in public debt to N77tn.”

Also Read: Finding a Way Out of Nigeria’s High Debt Costs

Ms. Oniha added “Like DMO always says, you can’t talk about debt without talking about revenue. We need the two to work together.” She explained that although the public debt is growing because of additional borrowings, the government is placing importance on revenue. 

Ways and Means Advances

In December 2022, President Buhari forwarded a letter to the Senate seeking its approval for the securitization of N23.7 trillion Ways and Means Advances the FG had received from the CBN. The letter generated uproar in the Senate chambers as Senate members challenged the constitutionality of the President’s request. 

According to the letter from President Buhari, “The ways and means advances by the Central Bank of Nigeria to the Federal Government has been a funding option to the Federal Government to cater for short term or emergency finance to fund delayed government expected cash receipt of physical deficit.” 

The terms of the securitization were N23.7 trillion over a 40 years tenure, three years moratorium on principal repayment; and a 9% pricing interest rate. The request which caused serious debate in the Senate was passed for a second reading, and the Senate Committee on Finance was mandated to look into it. 

However, the Senate President’s decision did not please the minority senators; George Sekibo (PDP, Rivers East) raised a point of order and asked Senator Lawan to delay consideration of the request until the Senate got a report on how the funds had been used. 

Citing Sections 80, 83, Section113(1) of the 1999 Constitution and Section 38 of the CBN Act, Senator Sekibo said,

“We came into this chamber today (yesterday) and were given the report on N22.7 trillion, which has been spent in the past 10 years. Whether it is 10 years or five years, whatever it is, the issue is that such payment, when the loans are taken, the Senate should be informed, we should be abreast with the information that such money is going to be taken because it is being taken on behalf of the people of Nigeria and we are entrusted with the power to make laws.”

At the end of the day, the Senate stepped down the request citing a lack of details after a closed-door session. 

Also Read: Buhari Pledges Fuel to Burundi Amidst Scarcity in Nigeria

According to news reports, the Federal Government borrowed N6.31 trillion through the Ways and Means Advances in 10 months which pushed the amount from N16 trillion in December 2021 to N22 trillion in October 2022. 

Nigeria’s Debt Burden

In light of the new revelations, Nigeria’s debt is expected to shoot up to 37% of its GDP by May 2023. This new figure also pushes Nigeria’s debt to an all-time high as the country continues to grapple with its debt and revenue challenges. 

The 2023 budget which is based on N10.49 trillion revenue features a debt servicing provision of about N6.55 trillion or 62% of the Federal Government’s projected revenue for 2023. While the FG has blamed the need for borrowing on Nigeria’s dwindling oil revenue, the country’s debt profile under President Buhari is in stark contrast with that of President Olusegun Obasanjo who met a debt of $35 billion and paid off $30 billion from the country’s debt. 

The Ministry of Finance and the DMO have attracted immense criticism from experts over the ballooning debt profile of the Federal Government, while some experts have proposed solutions. 

Ben Akabueze, the DG of the Budget Office of the Federation during the yearly conference of the Institute of Chartered Secretaries and Administrators of Nigeria (ICSAN) highlighted the need for the implementation of the Steve Oronsaye report as a way of conserving the country’s revenue.  

Inflationary Spending 

The unchecked Ways and Means Advances is a major driver of inflation. The National Bureau of Statistics’ latest data reveals that annual inflation has risen to 21.47%, “accelerating for the 10th straight month as food prices surged”. The consistent rise in inflation is responsible for many economic evils in Africa’s largest economy, the deepening of poverty, the relentless weakening of the naira, and the fall in international and domestic investment. It is odd that the Senate has waited so long to raise issues with the FGN over the abuse of Ways and Means lending from the CBN given the fact that economists and policy analysts have for long criticised the illegality as well as the inflationary impact.