N33trn Debt: DMO Cautions FG Against Borrowing

By Fola James

The Debt Management Office, DMO has urged the federal government to control its appetite for borrowing funds to finance critical infrastructure in the country.

DMO’s suggestion comes amidst reports that the federal government borrowed close to N5 trillion to finance this year’s budget, a huge part of which came from the Central Bank of Nigeria, CBN overdraft and other International Development Partners.

The figure could rise further to up to N6 trillion, according to checks as the government try to stimulate the economy by pumping more funds, to mitigate the impacts of COVID 19 pandemic, and the need to sustain the economy which is gradually coming out of recession, experts say.

This was disclosed in a statement by the director-general of the Debt Management Office, Patience Oniha, at the 3-Day Interactive Session on the 2022-2024 Medium Term Expenditure Framework (MTEF) and Fiscal Responsibility Paper (FSP) at the National Assembly (NASS) on Wednesday

Oniiha said it is not reasonable to continue to borrow as such will have both short-and-long term consequences on the nation’s economy.

She explained that government’s borrowing in the last one year has shut up due to efforts to bring the country out of recession. The DMO boss however warned the government to control its appetite

According to her ‘The new borrowings in the first 2020 budget was about N1.6 trillion, the revised budget about N4.6 trillion.

“In our presentation, we extracted the new borrowing from the budget and as the distinguished Chairman said, if we are continuing with that trajectory of N4.6 trillion last year, this year we incurred debt at the rate of N5.356 trillion so it is actually growing.

“Therefore, as Debt Managers, we are concerned with activities that will generate revenues that we can use to service the debt,” she stated.

The nation’s local and external debt under the President Muhammed Buhari’s administration has been pushed to over N33 trillion, with government’s insistence that it will continue to borrow.

The Minister of Finance, Zainab Ahmed said on Monday that government will not stop borrowing due to revenue shortfall, adding that the loans are being spent on critical infrastructure that have the potential to stimulate the economy.

She said “I have said it several times that the problem we have in Nigeria is that of revenue.

“We are borrowing sensibly and this is because we want to invest in infrastructures like power, water, roads and rails which are investments that are required to enhance business productivity in the country today.

“These businesses will grow, they will not only pay taxes, they will also employ people.

“If we don’t do this, we will regress even from where we are today. Borrowing is a necessary investment and we are doing it responsibly,” she said.

Not many agree with her.

Prominent Nigerians, including development partners such as the International Monetary Fund, IMF have warned that the nation’s debt is no longer sustainable.