NIGERIA’S DEBT PROFILE: Buhari’s Government Borrowed N22.03 trillion in 7 Years, Experts Warn!!!

Facts have emerged as to how the administration of President Muhammadu Buhari borrowed N22.03trn from local and international creditors to finance the budget deficit of the federal government, 9news Nigeria learnt.

The amount, which was borrowed over a period of seven years covering 2015 to 2022, excludes the huge cost of servicing the country’s debt burden.

Nigeria’s debt burden, based on figures released by the Debt Management Office. stood at N39.5trn as of the end of 2021.

The rising appetite for borrowing occasioned by the inability of the federal government to boost revenue has forced the current administration to accumulate the N22.03trn loan.

The Buhari-led administration is the highest to have taken more loans than any other government since 1999 when Nigeria returned to democratic rule.

Findings showed that while the administration of former President Olusegun Obasanjo met $28bn as foreign debt in 1999, it left $2.11bn in 2007 after successfully securing a debt relief package from the London and Paris clubs of foreign creditors.

When the last late President Umar Yar’Adua’s was in office. His administration borrowed $1.39bn to what it met.

After the death of Yar-Adua, the Goodluck Jonathan’s government incurred additional $3.8bn, taking the country’s total foreign debt to $7.3bn.

Nigeria’s total debt was about N12trn when the Jonathan administration handed over the country’s affairs to the administration of President Buhari in 2015.

Govt’s Rising Appetite for Borrowing
Based on figures obtained from the Debt Management Office, Nigeria’s public debt has been rising on an annual basis since 2015 when this government took over.

In 2015, the federal government borrowed the sum of N1.457trn to partly finance the budget deficit of N1.61trn. The borrowing according to analysis of the DMO figures is about 90.17 per cent of the budget deficit.

In the 2016 and 2017 fiscal periods, the government borrowed N1.81trn and N2.32trn to finance the budget deficits of N2.2trn and N2.35trn respectively.

The borrowings represent about 82.52 per cent and 98.54 per cent of the budget deficit for the two years.

With the worsening revenue crisis, the administration of Buhari further resorted to huge borrowing by incurring fresh debts of N1.64trn, N1.6trn and N4.19trn in 2018,2019 and 2020.

The debts were incurred within these three years to finance the budget deficits of N1.95trn, N1.9trn and N4.6trn.

The borrowing of N1.64trn, N1.6trn and N4.19trn also represents about 84.09 per cent, 84.1 per cent and 91.11 per cent of the budget deficit of the federal government.

In 2021, the administration borrowed N5.48trn to partly finance the budget deficit of N6.45trn, representing 85.11 per cent of the budget deficit.

The new borrowing is expected to drop to N5.13trn in 2022. This would be partly used to finance the N6.38trn budget deficit of the federal government.

Debt Deployed for Critical Infrastructure-DMO
The huge debt burden, according to findings, had limited the economic impact of the fiscal policy objectives of the Federal Government.

The Buhari’s administration had repeatedly come under series of attacks on the country’s rising debt levels

Nigeria’s debt service to Gross Domestic Product ratio had hit 73 per cent based on figures released by the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed.

But despite the fact that Nigeria’s debt to GDP ratio is one of the highest in Sub-Saharan Africa, the Director-General of the DMO, Patience Oniha maintained that the country’s debt is still within sustainable limit.

She explained that the debts were incurred for various purposes some of which were to support the implementation of the federal government budgets.

She added that the borrowings were sourced to enable the financing of critical infrastructure with multiplier benefits such as job creation, movement of persons and goods (trade) and overall GDP growth.

The DMO Boss explained further that the debt instruments have also provided safe-investment opportunities for investors with regular returns and served as a vehicle for mobilizing large pools of funds from domestic and international sources for investments in capital projects.

She noted that through bonds issued to raise funds to finance the budget deficit, the government has been able to develop the domestic financial sector through liquid assets for banks and other institutions who need to hold such assets.
She said that government borrowings are done for capital project execution and that the government has the ability to meet its obligations to creditors.

Some Finance and Economic Experts have warned the federal government to reduce its current level of borrowing as a huge chunk of government revenue is currently being spent on debt servicing.

They told the media that contrary to the position of the federal government that the problem facing Nigeria is in the area of revenue generation and not debt, the country currently has a debt problem.

The Lead Director, Centre for Social Justice, Eze Onyekpere, said rather than continue to rely on borrowing to finance its activities, the federal government should adopt other sources of funding the infrastructure needs of the country

According to him, some of the areas government could use to free more funds for infrastructure development include reorganization of the National Housing Fund;
reorganizing railway development to remove it as a federal monopoly so as to bring in private sector investments; and opening the window of investments into the electricity sector especially in transmission and distribution.

He said, “The rising debt service appears to be crowding out expenditure in critical infrastructure and human development.

“At the end of the day, if there is a shortfall in revenue, salaries and overheads will be drawn down, debts will be serviced whilst capital projects suffer.

On what could be done to check the high debt burden, he said, “The federal government should broaden the sources of revenue for budget and programme funding.

“Ultimately, these changes will relieve the Treasury of the undue burden of funding key infrastructure projects and as such, reduce the need for borrowing while the infrastructure still gets built. It will also reduce the demand for funds to pay back and service debts.”

The Registrar Chartered Institute of Finance and Control of Nigeria, Mr Godwin Eohoi, said that with the federal government spending a huge chunk of its budget size servicing the country’s debt, any further plan to increase the country’s debt may result into debt crisis.

He called on the government to discontinue borrowing in order to avoid the current situation where a huge chunk of the country’s annual budget is spent on debt servicing.

“Currently, what we are still doing is debt servicing using a huge proportion of the annual budget to pay debt. That is serious because the money that you would have used for other things is now being used to pay debt.

“The debt is still mounting and the servicing that we are doing is quite huge. We are using over 20 per cent of our budget to service debt. We should not even accumulate further debt beyond what we currently owe.”

Pastor Enoch Adeboye, the general overseer of the Redeemed Christian Church of God (RCCG), has lamented that Nigeria moving steadily towards bankruptcy under the present administration.

The 80-year-old clergy, noted that the President Muhammadu Buhari government’s borrowing is driving the nation’s economy to the brink of collapse.

Adeboye who stated this while delivering his Sunday sermon at the Redemption Camp at Mowe, Ogun State, expressed worry at the increased level of corruption in the country.

“80 per cent of what should have been the income of a nation is going into the hands of some people. That’s a lot of money, men!” he said.

He wondered the purpose of amassing such wealth at the expense of impoverishing the entire country.

According to him, more than 90 per cent of the proceeds of fuel were used in servicing debt interests accumulated by Nigeria.

“It is open secret, undenied, that more than 90 per cent of our annual income, of the money we get, are being used to pay the interest of the money we have borrowed. And then, it is in the news, we are borrowing more!” Pastor Adeboye emphasised in an alarming tone,” he continued.

“According to a friend of mine, we are moving steadily into bankruptcy,” continued the RCCG overseer.

The RCCG overseer further noted that he wasn’t excited by the upcoming 2023 general elections as there were pertinent questions to tackle before the expiration of Mr Buhari’s tenure.

9news Nigeria