As Minister of Finance says borrowings approved by NASS
By Gabriel Ewepu – Abuja
A non-profit making organisation, ActionAid Nigeria, AAN, and stakeholders, Friday, expressed worry over unstable levels of borrowings and rising national debt profile under the Buhari-led administration and poverty increasing daily.
The Country Director, ActionAid Nigeria, Ene Obi, in an address of welcome expressed worry over upward trend nation’s debt profile has assumed as it keeps piling up and closing the fiscal space for effective delivery of public goods.
According to Ene, as at December 31st, 2020, data from the Debt Management Office (DMO) showed that the nation’s total debt stock stood at N32, 915,514.85t ($86,392.54 billion).
She explained that that ActionAid is convened with other partners, including the Tax Justice and Governance Platform (TJ&GP), in order to drive engagements towards a tax structure that works for the Nigerians.
Meanwhile, she pointed out that continued borrowing is clearly not sustainable both in the short and the long-term but rather enslaving the citizens and future generations.
She added that the Nigerian government needs to proactively garner the political will to reduce the size and cost of governance, fully fight corruption, close leakages in the revenue generation and utilization as it makes no sense at all giving away large chunk of “our resources on tax incentives but continue to seek funding abroad and locally.”
She said: “It is in view of these that ActionAid is convening of a National Dialogue on the Rising Public Debt, as an antipoverty agency, ActionAid is worried that if the unchecked borrowing continues, Nigeria’s efforts at dealing with its challenges of unemployment, failing social services and infrastructure deficit and rising incidences of poverty will be a mirage.
“It is also concerned that the country is not exploring other avenues such as blocking leakages from corruption, illicit financial flows, reducing cost of governance amongst others as alternatives to unsustainable and conditional laden debt.
“Recall that in 2006 the Nigerian government secured a debt relief from the international consortium of creditors otherwise known as the ‘Paris Club’. The key argument of the government then was the inability of the country to meet its development obligations due to its debt servicing obligations.
“At the time the country was indebted to the Paris Club to the tune of US$36 billion. Giving the debt servicing obligation, that affected the annual expenditure of education and health care as was argued by the President at that time, thus making it an unsustainable venture in the journey to National development.
“Despite the misgivings on the large amount paid and its implication for the country’s resource base at the time, it was hailed as a moment that would allow for a new approach to debt management and development financing in more sustainable ways for the country. As at December 31st, 2020, data from the Debt Management Office (DMO) shows the nation’s total debt stock at N32, 915,514.85t ($86,392.54b).
“The upward trend is becoming worrisome, as the debt keeps piling up, it closes the fiscal space for effective delivery of public goods and services, especially gender responsive service delivery, thus exacerbating poverty and inequality. As reported by the World Poverty Clock, Nigeria has overtaken India as the poverty capital of the world and the most vulnerable groups include women and children.
“However, the unsustainable levels of the borrowing have become a major concern for stakeholders. At the recent Federal Inland Revenue Service Tax dialogue, the President of the African Development Bank Dr. Akinwunmi Adesina stated Nigeria’s Debt-to-GDP ratio will push debt service payments beyond more than 60% of federally collected revenues. With shrinkage in oil revenues, debt service payments posing the greatest risk to Nigeria.
“Local economic players, non-state actors and the media have also continuously raised their voices with the primary concern being the implication of its sustainability and future development financing in the country.”
However, in a keynote address delivered by the Minister of Federal Ministry of Finance, Budget and Planning, Zainab Ahmed, represented by Head, Marketing Development Department, Debt Management Office, DMO, Monday Usiade, while declaring the National Dialogue open, said the borrowings by the Federal Government followed due process as the National Assembly approved and passed budgets including monies to be borrowed.
Ahmed commended ActionAid Nigeria for conveying the dialogue as it will provide an avenue to broaden he discourse about public debts in Nigeria.
She said: “The federal government welcomes this National Dialogue with the theme ‘Rising Public Debt and Challenge of National Development.
“The government is also delighted that the purpose among others is to provide an avenue to broaden the discourse on Nigeria’s public debt as well as provide alternative public financing proposals that are responsive to the current socio-economic realities of the country and her people.
“As part of its mandate, the Debt Management Office, DMO, on behalf of the Federal Government has continued to provide relevant information on public debts to Nigerians on regular basis.”
However, she acknowledged the fact that debt profile is really increasing, “The government acknowledges that the nation’s public debt is growing, and it is also important to add that all borrowings both domestic and external are approved by the National Assembly before they are incurred, i.e the reps of the people.
“The borrowings are approved in the budget that is used to finance the budget offices and other projects presented by the various ministries, departments and agencies of the government.
“As you maybe aware the federal government conducts and publishes debt sustainability analysis on the public debt portfolio on annually basis.
“The DMO exercise helps to determine among others. The results of the DSO are used to prepare the national budget, then the budget is now presented to the National Assembly who has the responsibility of appropriation including the amount tha will be borrowed.
“The federal government also develops its medium term budget management strategies on regular basis. The NTDS helps to set public debt management objectives to ensure that borrowing operations are conducted in a responsible manner, and the cost of enlist profile of the debt portfolio are within reasons.”
She also explained essence why public debts are published, “Some of the reasons the government publishes relevant information on public debts include debt transparency and accountability and engender public discourse of this nature,
“Therefore, the federal government welcomes this national dialogue because it will contribute to the body of knowledge of public debt management in the country.”
In a goodwill message, the Governor of Central Bank of Nigeria, CBN, Godwin Emefiele, represented by Assistant Director, Monetary Policy Department, Dr Tawose Joseph, said there is no crime in borrowing, but let there be monitoring and evaluation of the money borrowed and the purpose meant for.
Emefiele further stated that the CBN formulates policies that positively affect the grassroots people, and added that the Apex Bank considers facts and figures before making policies.
According to him the CBN has rolled out 37 initiatives to positively affect the economy, but noted that there are challenges despite that.
He also alluded to the fact that there is linkage between debt and poverty based on the theme of the National Dialogue, ‘Rising Public Debt and Challenge of National Development’.
Also in a goodwill message, the National President, Nigeria Labour Congress, NLC, Ayuba Wabba, represented by Rita Goyit, lamented that the national debt profile has made poverty risen including widening inequality gap, and the people are living in abject poverty, which is at a worrisome height.
Wabba said this has led to other vices challenging the security and peace of the country.
He also lamented poor treatment of workers across the country as issues that affect them, especially the minimum wage debacle, where workers are not being paid what they ought to be paid.
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