Economists and finance experts have for some time been expressing concern over Nigeria’s continual rising debt profile, which is reaching an embarrassing , and almost intolerable level. Their concerns are not only genuine but equally understandable. According to statistics from the Debt Management Office, DMO, the country’s external debt alone rose from $10.32bn in June 30, 2015 to $22.08bn as of June 30, 2018.The implication of this is that the country’s external debt commitment skyrocketed by 114.05 per cent in the last three years. The DMO, further reported that commercial foreign loans, which stood at $1.5bn as of June 30, 2015, had risen to $8.8bn as of June 30 2018.With a commitment of $8.47bn, the World Bank is responsible for 38.36 per cent of the country’s foreign portfolio. Apart from the World Bank Group, Nigeria is also exposed to some other multilateral organisations such as the African Development Bank with a portfolio of $1.32bn and the African Development Fund with a portfolio of $843.47m.Others are the International Fund for Agricultural Development with a portfolio of $159.44m; the Arab Bank for Economic Development with a portfolio of $5.88m; the EDF Energy (France) with a portfolio of $64.96m and the Islamic Development Bank with a portfolio of $16.92m.
On the other hand, bilateral debts make up $2.39bn or 10.87 per cent of the country’s external debt exposure.
The bilateral agencies to which the country is indebted are the Export-Import Bank of China with a portfolio of $1.91bn; the Agence Francaise de Development with a portfolio of $274.98m; the Japan International Cooperation Agency with a portfolio of $74.69m; the EXIM Bank of India with a portfolio of $4.76m; and Germany (KFW) with a portfolio of $132.24m.
Unlike the foreign debt, the domestic component of the country’s total public debt decreased marginally recently as a result of moves to rebalance the local/foreign debt ratio.
According to the DMO, a major highlight in the latest public debt data was the decrease in the federal government’s domestic debt, which declined from N12.59tn in December 2017 to N12.58tn in March 2017 and N12.15tn in June 2018.It is understandable therefore why one of the key sectors of the nation’s economy, the manufacturing sector, recently called on the federal government to be extra cautious over its rising profile to achieve its set budgetary objective.
MAN emphasized the need for the government to address the nation’s rising debt profile had become imperative because of the associated service charge and the future economic burden that such debts would exert on the nation. Among the measures to reduce the debt burden, MAN stated , include the need for the government to commence the implementation of the harmonized taxes, and levies, as well as allowing the Joint Tax Board[JTB], to monitor and enforce compliance by states and local governments.
The Association also tasked the federal government to also cut down on the recurrent expenditures to reduce deficit, borrowing and service charges.
We join MAN and other bodies that mean well for the nation, in whatever measure they deem it necessary for the federal government, and indeed the entire country, to take to reduce the country’s embarrassing debt profile.