It is not news that Nigeria’s debt profile is now almost N80 trillion under the Buhari administration. This has created heightened concerns in the country as stakeholders see the Nigerian economy in an emergency situation and on the verge of collapse. According to the Debt Management Office (DMO), Nigeria’s total debt stands at around N46.25 trillion in the fourth quarter (Q4). However, with the recent borrowing spree by the federal government and the National Assembly’s approval of the Central Bank of Nigeria’s Ways and Means advance to the federal government, the Nation’s external and internal wealth could have surpassed N80 trillion.
In all, it is clear that something has to be done to the country’s debt situation. When Buhari was inaugurated in 2015, Nigeria’s debt stock was about N12 trillion and has risen to over N80 trillion as the country prepares for his exit on May 29. Clearly, in Buhari’s eight years as president, it was routine to borrow to fund yearly budget deficits. According to an analyst from the DMO, the projected deficits from 2015 to 2023 are estimated to be over N47.73 trillion.
Monetary agency advised the incoming government to reduce borrowings.
In light of this, the International Monetary Fund has urged the incoming government of President-elect Bola Tinubu to take steps to increase the country’s revenue base. Ari Aisen, the resident representative of IMF Nigeria Office, said this during a virtual forum on the Nigerian debt situation. He also advised the incoming government to drastically reduce dependence on debt to fund expenditures. According to Aisen, the president needs to focus on revenue and expenditure to resolve the debt issues of Nigeria.
He added that the debt situation had deteriorated because the Federal Government was spending more than it was actually getting in revenues. Aisen said that the concentration should be on reducing government spending. “It is really about fiscal discipline,” he said. “People should not permanently spend beyond what they generate in revenue because it becomes unsustainable.” said that the critical thing to do was for countries to be able to rely more on their own revenue to finance their own expenditure.
Analyst urged Tinubu’s govt to address fiscal-monetary distortion.
Also speaking at the virtual event, Vahyala Kwaga, a senior research and policy analyst at BudgIT, a Nigerian company that provides social advocacy using technology, urged the incoming government to address the distortion between fiscal and monetary authorities. Kwaga said that there is a lot of money being pumped into the economy and this has its impact. In economics, once more money is pumped into an economy, there is inflation. The Ways and Means is a lump sum of money that affected the economy significantly such that it compounded the problem of inflation.
President Buhari had said that a lot of these monies were used for infrastructural development and bailouts to state governors. The analyst urged Nigerians to also shine their searchlights on the state governors and their fiscal behaviors. The federal system allows the Federal Government to provide bailout funds to states. Kwaga said that the transparency and accountability problem that we have in handling funds is extremely problematic at the state level. He tasked the legislature to rise up to its responsibility by curbing abuse of process by the executive as witnessed in the Ways and Means Advances.
A lot of Nigerians have hope that Tinubu will increase revenue.
Meanwhile, the IMF has urged Tinubu to increase revenue of the government. Many people are expecting him to achieve this because he has done the same in the commercial center of Nigeria, Lagos, where he was governor for eight years. According to data from the Central Bank of Nigeria (CBN) statistical bulletin, Lagos generated N14.6 billion in 1999, an average of N1.22 billion monthly. However, the internally generated revenue had jumped up to N83.02 billion in 2007 when he left office. This was an average of N6.9 billion monthly. Many Nigerians are expecting him to replicate this at the federal level.
Debt Management Office: Website