Examination shows the current administration has taken by far more loans than any other government since 1999, contradicting a claim by the Senate finance committee.
By ishaq Rahmat
Nigeria’s public debt has risen the most under the Buhari administration when compared to previous governments since 1999, and foreign debt has grown three times more than the combined figure recorded by the past three administrations, analysis of the government’s domestic and foreign debts has shown.
While the Obasanjo government met $28 billion as foreign debt in 1999, it left $2.11 billion in 2007 after successfully securing a write-off by the London and Paris clubs of foreign creditors.
The Yar’adua/Jonathan government added $1.39 billion to what they met, and the Jonathan government incurred additional $3.8 billion, taking the country’s total foreign debt to $7.3 billion when that administration came to an end in 2015.
Nigeria’s external loan reached $28.57 billion by December 2020, meaning an extra $21.27 billion had been accumulated under the Buhari administration — three times the combined amount by past governments since 1999.
For domestic debt, considered relatively less harmful to the value of Naira than foreign debt, the figure rose from N795 billion in 1999 when the Obasanjo government came to power, to N8.8 trillion in 2015 when the Buhari administration assumed office. By December 2020, Nigeria’s domestic debt stood at N16.02 trillion — twice as much the combined amount taken by the past three governments.
The domestic and foreign debt figures are higher now as the government has borrowed more in 2021.
Debt Status Under Buhari’s Administration
Likewise, the nation’s exchange rate moved from N197 to a dollar in 2015 to N381 at the end of December 2020.
Debt Service Taking Huge Toll On Yearly Budget
Debt service obligations gulped 97 per cent of the Nigerian government’s total revenue in 2020, according to Budgit, a civic-tech non-profit organisation. Of the N3.42 trillion generated as revenue, Nigeria spent N3.34 trillion in debt servicing, Budgit said in a July report
Also, N3.3 trillion was set aside for debt servicing in the assented 2021 budget, about a quarter (24.3 per cent) of the entire N13.6 trillion total expenditure.
This trend has been in place since 2016.
In 2016, the country spent almost a quarter (about 24 per cent) of its budget to service debts. Of the N6.6 trillion budgeted for 2016, the government earmarked N1.5 trillion for debt financing.
The sum of N1.6 trillion was proposed for servicing debts out of the total (N7.3 trillion) budgeted for 2017.
In 2018, the figure rose as N2.2 trillion or 24.17 per cent was pegged for debt servicing in the N9.1 trillion budget.
In 2019, the government proposed to spend 24 per cent (N2.14 trillion) of the N8.9 trillion expenditure on debt service.
In mid-September, Mr Buhari sought the approval of the Senate to borrow $4 billion (4,054,476,863) and €710 million loan from bilateral and multilateral organisations to fund the deficit in the 2021 budget.
The president said the loan request is an addendum to the 2018-2020 borrowing plan and that the new borrowing is to meet “emerging needs” for some “critical projects.”
In July, the National Assembly had approved Mr Buhari’s request to borrow $8.3 billion and €490 million loans contained in the initial 2018-2020 borrowing plan.
“Bad Times Ahead”
Economic analyst, Tope Fasua, said Nigeria’s loan is already unsustainable because it is taking 95 to 97 per cent of revenue generated. “That ratio is not sustainable,” he said.
The huge amount the Nigerian government is borrowing mostly is “to cater for a lot of failures and they just borrow to keep some activities going,” the economist said. “How the loans are going to be paid is not in question for them and that’s very unfortunate.
“The loan is unsustainable from the perspective of revenue, from the perspective of corruption and value for money and from the perspective of project implementation.”
“Only 30 per cent value for money is what we get especially on these loans, some of what we are taking are for very frivolous issues,” he said.
“In my opinion, we should take loans only for projects that have the ability to pay themselves back. If a project is not generating cash flow, it shouldn’t be taken.
“If we are taking loans for local roads and schools, who is going to pay? These are projects that should be funded from internally generated revenue.”
He also attributed the currency challenges to Nigeria’s debt portfolio.
“We have a challenge with the naira presently, and one of the key things that throws your currency off is debt unsustainability.
“Conversation around our debt should be more geared towards how we are channeling the debt we are borrowing in terms of efficiency and proper allocation. The danger here is we are not sufficiently channeling what we are borrowing on productive capacity and infrastructure, instead we borrow to finance more of recurrent spending.”
Site Title 