No Cause for Alarm Over National Debt – DG, DMO

“The projected N77 trillion (in national debt) includes N22 trillion ways and means advances that have already been spent and N22.72 trillion ways and means advances currently under consideration by the national assembly.”

Ms. Patience Oniha, the Director-General of the Debt Management Office has described as unnecessary the alarm raised in the media over the projected rise in Nigeria’s public debt. Ms. Oniha was reacting to claims from the media that the next government would inherit an N77 trillion debt profile. She claimed that the debt would only reach such levels if the Ways and Means advances from the CBN were securitized. 

She noted that securitization of the ways and means advances will allow the DMO to include the debt in the debt stock of the country thus improving debt transparency. 

Also Read: 2023 Budget to Take Nigeria’s Debt to N77 Trillion 

During the public presentation of the 2023 budget by the Minister of Finance, Budget, and National Planning, Dr. Zainab Ahmed, Ms. Oniha noted that the nation’s debt would hit N77 trillion by May 2023. The report has generated an uproar in the media.

However, the DG has maintained that the projected figure is only to ensure debt transparency and that it contains the external and domestic debts of the Federal Government, the 36 state governments, and the FCT.

According to Ms. Oniha, the major source of the increase is the N22 trillion ways and means advances that have already been spent. “It also includes N22.72 trillion ways and means advances currently under consideration by the national assembly,” she added. 

She stated “The debts that will be added to the public debt data in 2023 include the N1 trillion ways and means advances to finance the supplementary budget. This has already been approved by the national assembly.”

Ms. Oniha also added, “The projected debt stock for May 2023, also includes N5.567 trillion, representing about 50 percent of the new borrowing of N11.134 trillion in the 2023 appropriation act.”

Nigeria’s Debt to GDP Ratio

In light of the new revelation, Nigeria’s debt to GDP ratio will hit about 38% by May 2023 with a projected GDP growth rate of 3.75% as contained in the 2023 budget. Analysts had earlier predicted the debt-to-GDP ratio to hit 40% by 2025 at the previous borrowing rate. The country may well hit the figure way before the set time. 

Nigeria’s Debt is Sustainable – Minister of Finance

During a presentation of the scorecard of her ministry for the past 7 years, the Finance Minister, Dr. Zainab Ahmed reiterated that Nigeria does not need debt cancellation or restructuring. 

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According to her, “We don’t have any need to restructure, our debt management strategy is being followed closely.  We provide in our budgets, provision for debt service and it’s taken as first line charge. We haven’t defaulted on any loan – local and external.” 

While she spoke about Nigeria’s debt sustainability, she noted that the country was facing a revenue problem due to the lacklustre financial performance of the oil sector. 

However, the DMO took a slightly different position earlier in December 2022. The DMO had noted that while Nigeria has a debt profile that was acceptable given the size of its economy, the country’s ability to sustain the obligations on the loans was under threat. 

According to the DMO DG, “Dependence on borrowing and low revenue base are now threatening debt sustainability.”