Nigeria’s total debt now $64bn – DMO

The Debt Management Office (DMO) has put the total profile of Nigeria at N64 billion, dismissing fear all the same that the debt overhang will affect the national economy.
The Director-General of the Debt Management Office
(DMO), Dr Abraham Nwankwo, made this known in a submission he made to the Senate According to the submission he made to the Senate Committee on Foreign and Local Debts, the rising debt profile of the country will not affect the economy negatively.

He said the N1.2 trillion domestic borrowing and foreign loan of N635.88bn proposed in the Medium Term Expenditure Framework for the 2016 fiscal, was also healthy for the nation’s economy.
He told the Senate that 84 percent of the entire debt profile of Nigeria was owed locally while the remaining 16 percent was foreign loan.
He also said Nigeria needs the sum of $25bn per annum continuously for the next ten years in order to effectively tackle its infrastructural deficit.

He explained that debts owed local contractors were not part of the domestic debts quoted because their details are under the purview of the budget office of the federation, and National Planning, because they are operational debts.

The DMO boss said local contractors’ debts arose from the activities of agencies, in terms of implementation of capital expenditures.
He said, “Ordinarily if the implementation of the budget is followed in details, there is no reason why there should be local contractors debt because it is already in the budget.

“We have been sensitising Nigerians that we need to do better because our tax GDP ratio is very low compared to countries in our debt role, their entire GDP ratio is about 18 percent whereas for Nigeria, it is about 6 percent which means that we are not being effective in collecting taxes to reflect the size of our economy.

“This has implications for debt service. Certainly there is need to be careful, even though there is space we need to relate debt service to revenue. The solution is that we have a big gap to fill because when we move upward from the 6 percent tax GDP ratio, we will have a lot of money to solve our problems including servicing our debts.

“For now our debt servicing GDP ratio is still very low, but we are optimistic because there is room to collect tax from the existing level of economic activities”.
On the proposed borrowing in the Medium Term Expenditure Framework for the 2016 fiscal year, the DMO boss said government projection was in the right direction.


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