Agora Policy, an Abuja-based think tank set up to find practical solutions to urgent national challenges, has disagreed with the Debt Management Office (DMO) on Nigeria’s increasing debt, saying it is not sustainable.
It would be recalled that the DMO defended Nigeria’s debt profile, which it noted was about to reach N45 trillion.
“We usually hear complaints that debt levels are rising in Nigeria. Globally, debt levels are rising, not just in Nigeria.
“In Nigeria, we borrow to finance budget deficits, sometimes we borrow to finance specific projects and services like railways and airports. Financing infrastructure is an economy itself. It creates jobs across all sectors.
“We also borrow to finance maturing loan obligations like the Federal Government of Nigeria (FGN) bonds and Nigeria treasury bills,” Patience Oniha, the Director-General of DMO, stated.
Dismissing DMO’s explanation on Nigeria’s debt portfolio, Agora Policy lamented that it has risen by 436% from N6.17 trillion in December 2011 to N33.11 trillion in December 2021.
In a report titled, ‘Options for Revamping Nigeria’s Economy’, the think thank added that “alarmingly, debt service was the largest component of expenditure with N1.94tn, followed by non-debt recurrent expenditure (N1.7tn), capital expenditure (N773.63bn) and statutory transfers (N289.89bn). Thus, the country is in a precarious situation of borrowing to pay back debt.
“Since revenue was N1.63tn and debt service was N1.94tn, the government borrowed N308bn to pay back debt. This is clearly a perilous situation.”
The group, however, advised the Federal Government (FG) to consider deepening and diversifying sources of revenue, re-calibrate expenditure to spend smartly, and invest efficiently, rather than incurring more debt.
