Barely 10 years after Nigeria exited from the Paris and London Clubs debt crises, the nation is back to public debt crisis, a Non-Government Organisation – Social Development Integrated Centre – and stakeholders have said.
They spoke in Abuja on Tuesday at a forum titled Promoting Accountability in the Management of Public Debt convened by Social Action for the presentation of a report titled Whose Burden? Examining the Growing Public Debt Crisis in Nigeria.
They also urged President Muhammadu Buhari to halt all public borrowing until all public indebtedness was probed and uses determined.
The report said, “Nigeria’s total public debt stock stands at N12.12 trillion ($63.5 billion) as of June 30, 2015. Out of this amount, $10.3 billion constitute external debt. These figures represent the country’s highest debt profile since 2007.
“The growth in the volume of debt resulted from massive borrowing from both domestic and external sources by the states and federal governments as data obtained from the Debt Management Office reveal.”
It added, “The renewed spate of borrowing from external sources followed the reduction of Nigeria’s external debt from $36bn to about $3bn in 2006 through debt payment and buyback deals by the Olusegun Obasanjo administration.
“Poor management of public debts coupled with sharp practices by creditor institutions resulted in escalation of the country’s debt burden.”
The report wondered why the Federal Government should keep accumulating public debt through the domestic debt market when it has acknowledged that it was crowding the private sector from the debt market.
It said, “Our findings raise questions as to the necessity, desirability and capacity of government to manage Nigeria’s proposed loans and the rising debt stock. A pragmatic assessment requires that the government halt all borrowing (whether on concessionary terms or not) by all tiers of government until a process to verify the details of the loans – including what they were used for – is established.
“The National Assembly should pass a legislation placing a moratorium on all external borrowing by government at all tiers. During the period of the moratorium, there should be public audit of past loans taken by all tiers of government to ascertain their stock, conditions, purpose and usage.
“As both the Federal Ministry of Finance and the Debt Management Office have acknowledged that domestic borrowings are costly in terms of interest payment, and result in the crowding out of the private sector from the debt market, there should be reduction of borrowing by the government through the monthly issuance of FGN Bonds and the Nigerian Treasury Bills.”
It said effort should be made to reduce recurrent expenditures and wastage in governance. It also asked the Federal Government to put in place a framework to mitigate the effects and the burden of the country’s debt crisis on the poor.
Speaking at the event, Director of SDIC, Dr. Isaac Osuoka, said the drop in oil revenues and allocations from the federation account have exposed the irresponsibility of Nigerian governments both at the federal and state levels.
He added that the increased borrowing has not significantly impacted positively on service delivery or the state of infrastructure.
Other speakers at the event also condemned the rising debt level, saying it demanded urgent attention from both the executive and legislative arms of government.
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