OREDOLA ADEOLA
The Muhammadu Buhari’s administration is less worried about the rising debt profile of the country which grew from N12 trillion by December 2016 to N21.7 trillion as at December 31, 2017.
Mrs. Kemi Adeosun, Minister of Finance, disclosed this in Abuja on Monday, in reaction to the criticism that followed the huge figure released by the Debt Management Office ( DMO).
According to her, the Federal Government was borrowing to build key national assets for economic growth. She said that the loans are for long term infrastructure development, investments that allow businesses to thrive.
Recall that the Director General of the Debt Management Offices (DMO), Patience Oniha, had on Wednesday, March 14, 2018, put the country’s public debt at N21.7 trillion as at December 31, 2017.
She stated that the figure was composed of External Debt stock of 26.64 per cent, up from 20.04 per cent in 2016, and Domestic Debt of 73.36 per cent, down from 79.96 per cent in 2016.
The Domestic Debt of Federal Government Domestic Debt was N12.589 trillion and States and the FCT was N3.348 trillion, while the External Debt of the Federal, States and the FCT was put at N5.787 trillion.
She however noted that the government was committed to reduce the ratio to 60 percent for Domestic, and 40 per cent for External.
This however was criticised as Nigerians worried that the high debt stock could lead the country back into another debt trap.
The Finance Minister stated that the borrowings were used to finance capital expenditure which would stimulate the economy.
Mrs. Adeosun, said, “The funds injected through the borrowings strongly supported the implementation of the Federal Government’s Budget, which helped the country exit recession in 2017 earlier than expected.
“If we didn’t do this, we would have to wait for oil price to recover, and this would have prolonged the recession.
“The public debt profile as at December 31, 2017 represented about 18.20 per cent of Nigeria’s gross domestic product for the year, indicating a debt sustainability ratio within the 56 per cent threshold for Nigeria’s peer group.
“What government is borrowing for is what is important. Nigerians should be concerned if government is borrowing to pay salaries, travels, training or for wasteful venture.
She further noted that the country is not at risk of going into recession again if the price of oil crashes. She said, "Unlike the last recession, the country did not have as much cushion as today".
According to her, ongoing reforms by this administration allow the Ministry to attend the Organisation of Petroleum Exporting Countries meetings along with Ministry of Petroleum Resources officials, to get latest information and better outlook of issues.
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