Within a three month period covering July and September this year, the total debt stock of Nigeria rose to ₦32.22trn, figures released by the Debt Management Office has revealed.
According to the DMO, Nigeria’s debt stock grew by ₦1.214trn between June 2020 and the end of September 2020.
An analysis of the DMO public debt figures show that 37.82 per cent represents external debts, while the balance of 62.18 per cent is for domestic debt obligations.
It said that the Federal and State Governments as well as the Federal Capital Territory recorded increases in their Debt Stock due to borrowings to enable them to respond appropriately to the COVID-19 Pandemic and to meet revenue shortfalls.
“The Total Public Debt Stock stood at N32.223trn or $84.574bn.
“The debt stock is made up of the Domestic and External Debt Stocks of the Federal Government of Nigeria, the 36 State Governments and the Federal Capital Territory.
“Compared to the Total Public Debt Stock of N31trn as at June 30, 2020, the Debt Stock in Q3 2020 increased by N1.214trn or 3.91 per cent.
“The FGN, State Governments and the FCT all recorded increases in their Debt Stock due to borrowings to enable them to respond appropriately to the COVID-19 Pandemic and to meet revenue shortfalls.”
The DMO said that issuance of Promissory Notes by the Federal Government to settle inherited liabilities also contributed to the growth in the Public Debt Stock since the 2018 fiscal period when they were first issued.
It said that while N20.136bn of the Promissory Notes were issued in the third quarter of this year, the Promissory Notes Outstanding, which are all included in the Domestic Debt Stock, stood at N971.87bn.
The debt accumulation is coming at a time the key government officials in the Economic Management Team had repeatedly defended the country’s debt level arguing that it is still within sustainable limit.
The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed had insisted that Nigeria does not have a debt problem.
She said what the government needed to do is to increase it’s revenue generating capacity in order to boost revenue to about 50 per cent of Gross Domestic Product.
The finance minister had said, “Nigeria does not have a debt problem. What we have is a revenue problem.
“Our revenue to GDP is still one of the lowest among countries that are comparable to us. Its about 19 per cent of GDP and what the World Bank and IMF recommended is about 50 per cent of GDP for countries that are our size. We are not there yet. What we have is a revenue problem.”
But the finance minister’s position differs with that of some economic experts who said that the huge borrowings portend danger for the economy.
For instance, the Managing Director/Chief Executive Officer Cowry Asset Management Ltd, Johnson Chukwu said the Federal Government’s current fiscal position constrains it from embarking on such huge expenditure as a result of accumulated large deficits over the past few years.
He said the huge debt is a burden for the economy, adding that time had come for Nigeria to begin to seek for debt relief from its creditors.