The Director-General, Debt Management Office, Patience Oniha, on Wednesday, defended the nation’s debt profile, saying there is nothing wrong with borrowing.
She said rather than complaining about the nation’s debt profile, what should be of concern to Nigerians should be how the loans are being utilised.
Oniha told journalists in Abuja that borrowing is not restricted to Nigeria as many big countries also borrow to keep their markets open.
The National Bureau of Statistics had in its Q1 2020 report put the total public debt as of March 31, 2020 at N28.63 trillion.
“Nigerian States and Federal Debt Stock data as of March 31, 2020, reflected that the country’s total public debt portfolio stood at N28.63 trillion.
“Further disaggregation of Nigeria’s total public debt showed that N9.99 trillion or 34.89 per cent of the debt was external while N18.64 trillion or 65.11 per cent of the debt was domestic,” the report had read.
But the DMO boss said Nigeria needed to borrow in order to fund its budget deficit.
She said, “Why do we borrow? Every year, you see us prepare a budget. This is not only in Nigeria, countries have budgets. We also prepare the Medium-Term Expenditure Framework; the budget is a part of that.
“In the budget, you see all the lines: the personnel cost, capital expenditure and you will see new borrowing. You will see domestic and external, why do we have those?
“This is so because there is a deficit. The meaning of this is that our revenues are less than our expenditure. One way you balance it is through the sale of assets. You will remember the days that BPE was selling a number of our assets and we were getting money.
“The other way out is through new borrowing. That is always in the budget, so it starts from there.
“I always say that when we talk about the growth in debt stocks, we forget the origin. When you have deficit in the budget and you borrow, it adds on. So, it goes like that incrementally unless the ones that are matured and we paid.
“So, when you see a deficit in the budget, that is where you should start. We borrow to finance the deficit in the budget.”
Oniha said even when the nation was at its best moments with oil prices hovering between $100 and $110 per barrel and with no disruption in production, the country still borrowed not to talk of now that revenues are lesser.
She noted that borrowing can never be a unilateral decision as the law requires that the approval process should go through the Federal Executive Council and the National Assembly.
“We cannot borrow without those two levels of approvals. That is the requirement of the DMO Act and the Fiscal Responsibility Act,” she explained.
Justifying the increase in the borrowing plan in the revised 2020 Budget, Oniha explained that the COVID-19 pandemic brought with it additional expenses on the part of the government.
The DMO boss also explained that when her office publishes the nation’s debts, they are not the loans accessed by the Federal Government alone.
She said although an average of 75 per cent of the loans might be that of the Federal Government, the figure also includes the debts of states and the Federal Government “because it is one country and one Gross Domestic Product.”