By Chijioke Ohuocha
LAGOS Dec 13 (Reuters) – Nigeria’s government has found unrecorded debts of 2.2 trillion naira ($7.22 billion) left over from the previous administration, which turned up after an audit aimed at improving transparency, it said in a tweet.
“2.2 trillion unrecorded debt owed contractors/private sector found on federal government books, inherited from previous administration,” said the message posted on twitter.
The debts were owed to contractors, oil marketers, exporters and electricity distribution companies, Finance Minister Kemi Adeosun said on Sunday in a statement. They will be settled by issuing a 10-year promissory note, Adeosun said.
President Muhammadu Buhari, elected last year on a promise to end corruption and mismanagement, has vowed to restore financial “sanity” in Nigeria, accusing previous governments of throwing the rule books “to the dogs”.
The debts amount to 2.3 percent of Nigeria’s gross domestic product, analysts at Ecobank said. Nigeria has a debt-to-GDP ratio of 16.6 percent.
Nigeria is facing its worst economic crisis in 25 years, brought on by low oil prices, which have slashed government revenue, hammered its currency and caused chronic dollar shortages, frustrating businesses.
Investors may worry about the potential of more debt to emerge, with oil receipts and foreign inflows declining, which could push up Nigeria bond yields and increase the government’s cost of servicing its debt, analysts at Ecobank said.
Nigeria planned a record 6.06 trillion naira budget for this year, but it has struggled to fund it. It now plans to increase the 2016 amount by 20 percent for next year’s budget, to help lift the economy out of recession.
Nigeria last week named Citigroup, Standard Chartered Bank and Stanbic IBTC Bank to manage a planned $1 billion Eurobond sale and hopes to start the issuance process in January. ($1 = 304.50 naira) (Additional reporting by Alexis Akwagyiram, editing by Larry King)