Nigeria’s Debt Management Office, DMO says the country now owes N27.5 trillion (about US$90 billion) as current debt. In all probability the debt profile will increase by N2.1 trillion (US$6.8 billion) which is the deficit of the 2020 Appropriation Bill now being considered by the National Assembly.
During the tenure of Chief Olusegun Obasanjo (1999-2007) Nigeria secured a debt relief of US$18 billion when the country decided to settle US$12.4 billion in arrears and debt buy back. Critics of the move said that it was the largest transfer of funds from a relatively poorer nation to wealthy countries in modern times. The decision was described as poor economic judgment on the part of Nigeria. From that ‘ground zero’ Nigeria has since 2011 been borrowing again externally and internally
Internatoons l financial institutions, local and foreign financial experts are unanimous in their opinions that Nigeria’s current borrowing spree will be unsustainable and it’s capable of causing incalculable damages to the economy from now into the future. Most of them feel that subsidy on petrol must be removed. Government insists that it is not the right economic decision it can take at this time Aas it will compound the current problem of poverty prevalent in the country.
The institutions and experts are also asking Nigeria to improve on collection of tax revenues after identifying the fact that the country’s tax income to debt ratio is one of the lowest in the world. Again Government is promising to continue to expand tax dragnet and improve on the efficiency of tax collection in order to raise additional revenue. Part of the measures for improvement in revenue collection is the proposed increase in Value Added Tax, VAT from 5% to 7.5%. A Bill to that effect is now before the National Assembly.
Nigeria will spend N2.45 trillion to service its debt in 2020. Being about one quarter of the proposed Budget for next year, this is generating displeasure in many quarters that the plan to spend more on infrastructure will be a mirage.
The debate over Nigeria’s uncomfortable debt profile will remain vibrant in the months ahead.
