Chairman, Senate Committee on Foreign and Local Debts, Shehu
Sani (APC, Kaduna Central), has declared that Nigeria’s total debts
stands at $60 billion.
This is even as the Islamic Development Bank (IDB) said Nigeria spent 80 percent of her revenue on debt servicing.
Speaking while hosting the resident representative of IDB in Nigeria, Abdallah Kiliaki, Sani said: “Available records have clearly shown that Nigeria’s total debts profile stands at $60 billion out of which $10.6 billion is from foreign loans.”
Also, Kiliaki said though Nigeria’s debts GDP ratio was low at 17 percent, resources being used to pay the debts were enormous going by percentages taken on yearly basis.
According to Kiliaki, for Nigeria not to get herself suffocated by such huge debt servicing with limited resources, there is the urgent need for her to expand the scope of its resources through diversification of her economy into other critical areas, especially agriculture, on the template of value addiction from production to processing and to export, which would earn her required foreign incomes.
He said the recent visit of the 19 Northern states governors to the head office of the bank in Jeddah, Saudi Arabia, for rehabilitation assistance for the Internally Displaced Persons (IDPs) in North Eastern states, had no financing envelope agreement yet, being a sensitisation move.
His words: “My visit is very crucial because we need to look at the debt profile of a country before we give it new contractual sort of financing. We also work closely with the International Monetary Fund and the World Bank to ensure that our financing has the required threshold of grant financing which is normally 35 percent but at the same time there were financing that is not a burden to a country to the extent that the debt may not be sustainable.
“When talking about unsustainable debt, it means that a country or a borrower is unable to pay. So we take very serious note of that. When you look at the debt GDP ratio of Nigeria is very low, it is very low. It is 17 percent compared to Italy and other countries, which is about 150 percent, while that of the United States is about 100 percent.
“But there is a caveat, it is true that debt to GDP ratio is low but when you look at the amount, the revenue, to debt servicing ratio, the amount of money that the government is collecting, the revenue of the government vis a vis the ratio to the total debt, I think Nigeria pays about 75 to 80 percent of its revenue to service debt, so this is very high compared to other countries where they use just 10 percent.
“What this means is that one, the government of Nigeria needs to expand or mobilise additional resources through taxation by broadening the tax base but at the same time, we as lenders, financiers, we need to reconsider our conditions of financing meaning that we should try as much as we can, to extend to Nigeria, financing that will not make it difficult for the country to pay its debt.
“In a nutshell, as clearly shown by available financial records, Nigeria still has considerable leverage of taking loans from multilateral financial institutions for development or investments purposes going by her very encouraging low ratio of debts servicing to GDP, but the factor of dwindling revenues being used to service the debts must be urgently looked into, by way of possible expansion.”
According to him, even if the Northern states governors had approached the bank for definite financial assistance, there was no way the Federal Government of Nigeria would not be carried along.
In his remarks, Sani urged the bank and other multilateral financial institutions to stop propping the country into taking more loans on account of its low ratio of debts servicing to GDP, saying “what is 17 percent today may if needed control measures are not applied, go up to 77 percent and invariably returning the country back to where it was before 2006, when London and Paris Club wrote off substantial part of her foreign debts then.”
He specifically told IDB through its representative to be practically involved in the country’s effort at diversification of her economy and not just presenting her guided loan offer, warning that “henceforth, his committee would monitor every cent, every dollar and even kobo any government in Nigeria borrows.
“Borrowing should simply be a last option for any serious minded government and not just first option of way out of problems at hand because we don’t need to overburden our next generations for repayment of needless loans taking before their time”.
This is even as the Islamic Development Bank (IDB) said Nigeria spent 80 percent of her revenue on debt servicing.
Speaking while hosting the resident representative of IDB in Nigeria, Abdallah Kiliaki, Sani said: “Available records have clearly shown that Nigeria’s total debts profile stands at $60 billion out of which $10.6 billion is from foreign loans.”
Also, Kiliaki said though Nigeria’s debts GDP ratio was low at 17 percent, resources being used to pay the debts were enormous going by percentages taken on yearly basis.
According to Kiliaki, for Nigeria not to get herself suffocated by such huge debt servicing with limited resources, there is the urgent need for her to expand the scope of its resources through diversification of her economy into other critical areas, especially agriculture, on the template of value addiction from production to processing and to export, which would earn her required foreign incomes.
He said the recent visit of the 19 Northern states governors to the head office of the bank in Jeddah, Saudi Arabia, for rehabilitation assistance for the Internally Displaced Persons (IDPs) in North Eastern states, had no financing envelope agreement yet, being a sensitisation move.
His words: “My visit is very crucial because we need to look at the debt profile of a country before we give it new contractual sort of financing. We also work closely with the International Monetary Fund and the World Bank to ensure that our financing has the required threshold of grant financing which is normally 35 percent but at the same time there were financing that is not a burden to a country to the extent that the debt may not be sustainable.
“When talking about unsustainable debt, it means that a country or a borrower is unable to pay. So we take very serious note of that. When you look at the debt GDP ratio of Nigeria is very low, it is very low. It is 17 percent compared to Italy and other countries, which is about 150 percent, while that of the United States is about 100 percent.
“But there is a caveat, it is true that debt to GDP ratio is low but when you look at the amount, the revenue, to debt servicing ratio, the amount of money that the government is collecting, the revenue of the government vis a vis the ratio to the total debt, I think Nigeria pays about 75 to 80 percent of its revenue to service debt, so this is very high compared to other countries where they use just 10 percent.
“What this means is that one, the government of Nigeria needs to expand or mobilise additional resources through taxation by broadening the tax base but at the same time, we as lenders, financiers, we need to reconsider our conditions of financing meaning that we should try as much as we can, to extend to Nigeria, financing that will not make it difficult for the country to pay its debt.
“In a nutshell, as clearly shown by available financial records, Nigeria still has considerable leverage of taking loans from multilateral financial institutions for development or investments purposes going by her very encouraging low ratio of debts servicing to GDP, but the factor of dwindling revenues being used to service the debts must be urgently looked into, by way of possible expansion.”
According to him, even if the Northern states governors had approached the bank for definite financial assistance, there was no way the Federal Government of Nigeria would not be carried along.
In his remarks, Sani urged the bank and other multilateral financial institutions to stop propping the country into taking more loans on account of its low ratio of debts servicing to GDP, saying “what is 17 percent today may if needed control measures are not applied, go up to 77 percent and invariably returning the country back to where it was before 2006, when London and Paris Club wrote off substantial part of her foreign debts then.”
He specifically told IDB through its representative to be practically involved in the country’s effort at diversification of her economy and not just presenting her guided loan offer, warning that “henceforth, his committee would monitor every cent, every dollar and even kobo any government in Nigeria borrows.
“Borrowing should simply be a last option for any serious minded government and not just first option of way out of problems at hand because we don’t need to overburden our next generations for repayment of needless loans taking before their time”.
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