Buhari’s govt right to raise Nigeria’s debt profile to N21.7 trillion — Adeosun

Minister of Finance, Kemi Adeosun
Minister of Finance, Kemi Adeosun

The Minister of Finance, Kemi Adeosun, has defended the country’s current N21.7 trillion debt profile, saying the federal government was borrowing to build key national assets for economic growth.

Mrs. Adeosun said in Abuja the Muhammadu Buhari administration was not worried with the high debt stock contrary to criticisms and insinuations that the borrowings may lead the country back into another debt trap.

On Wednesday, March 14, 2018, the Director General of the Debt Management Offices (DMO), Patience Oniha, put latest figures of the country’s public debt as at December 31, 2017 at N21.7 trillion.

Mrs. Oniha said the figure was composed of External Debt stock of 26.64 per cent, up from 20.04 per cent in 2016, and Domestic Debt of 73.36 per cent, down from 79.96 per cent in 2016.

Although she said government objective was to reduce the ratio to 60 percent for Domestic, and 40 per cent for External, the Director General said details include Federal Government Domestic Debt (N12.589 trillion) and the Domestic Debt of States and the FCT (N3.348 trillion).

Further details showed the External Debt of the Federal, States and the FCT at N5.787 trillion.

But, Mrs. Adeosun said despite the rising profile of the country’s debt from about N12 trillion by December 2016, what Nigerians should be concerned about should be that “the borrowings were for financing capital expenditure to stimulate the economy.”

“The funds injected through the borrowings strongly supported the implementation of the Federal Government’s Budget, which helped the country exit recession in 2017 earlier than expected,” she said.

The Minister noted that the public debt profile as at December 31, 2017 represented about 18.20 per cent of Nigeria’s gross domestic product for the year, indicating a debt sustainability ratio within the 56 per cent threshold for Nigeria’s peer group.

“What government is borrowing for is what is important. Nigerians should be concerned if government is borrowing to pay salaries, travels, training or for wasteful venture.

“But, we are borrowing for long term infrastructure development, investments that allow businesses to thrive,” she insisted.

The alternative to not borrowing to get out of recession, she argued, would have been to “wait for oil price to recover,” a situation that would have prolonged the recession.

The Minister assured that the country was not at risk of going into recession again if the price of oil crashes, pointing out that before the last recession, the country did not have as much cushion as today.

Besides, she said ongoing government reforms now allow the Ministry of Finance to attend the Organisation of Petroleum Exporting Countries meetings along with Ministry of Petroleum Resources officials, to get latest information and better outlook of issues.

On why government was still paying subsidy on imported petroleum products after it vowed not to do so, Mrs. Adeosun explained “the subsidy the marketers were demanding was arrears inherited from the previous administration.”

“We are not paying subsidy in the old sense of the way subsidy was paid to oil marketers. The subsidy they are clamouring for is what they were owed before the present administration came in.

“We are negotiating with them to ensure our focus remains on our capital projects. That is really our priority.

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