A combination of three major reasons has been given for the continuous growth of the nation’s debt stock.
Naija News reports that the Debt Management Office (DMO) on Wednesday said a combination of three major factors have contributed to the growth of Nigeria’s N46.25 trillion debt stock.
The DMO Director-General, Patience Oniha, revealed that Nigeria has been running a budget deficit for many decades.
According to her, the Federal Government keeps issuing promissory notes to settle obligations for debts that it doesn’t really have the revenue to settle because several loans have been contracted from multilaterals and bilaterals.
The DMO boss explained that Nigeria had contracted several loans in time past from multilaterals like the World Bank, and the African Development Bank and bilaterals like Germany, India, and China and disbursements are going on.
Oniha, who gave this position on Wednesday while featuring on Channels Television’s Sunrise Daily noted that even though borrowing is an accepted form to fund government activities, there should be avenues to generate revenues as well.
She advanced that when money borrowed is judiciously utilised to stimulate growth, revenue will be generated to offset the debt.
Oniha said, “Nigeria’s debt stock is N46.25 trillion. It includes the debt of the 36 state governments and the Federal Capital Territory. The Federal Government is responsible for 84% to 85% of this.
“What are triggers and why is the debt stock growing because when the debt stock is growing, debt service also grows.
“The debt stock is growing because Nigeria has been running a budget deficit for many decades. In good and bad times with oil prices, we have borrowed. We’ve been running budget deficits and those deficits are funded largely 85 to 95% from borrowing and that is cumulative. These are publicly available data.
“As we borrow each year, it adds up. So, the annual budget deficits are a major component. If you look at this year’s budget, the budget size is N21 trillion, borrowing is N10 trillion.
“The third part – the government has been issuing promissory notes to settle obligations for which it doesn’t really have the revenue. So, that is why the debt stock has been growing.”