• Monday, April 15, 2024
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DMO reassures Nigeria not in debt distress

Nigeria’s debt hits N39trn, says DMO

Nigeria is not in any debt distress, the Debt Management Office (DMO) reassured on Wednesday.

The DMO was reacting to media publications which listed Nigeria and nine other countries as high-debt risk nations – quoting a World Bank report on the financial statement for IDA, which was among the Bank’s FY21 audited financial statements released on Monday.

Patience Oniha, DG DMO told BusinessDay that the report was misrepresented and that the World Bank was only assessing loan disbursements under its International Development Association (IDA) programme – which caters to the poor and developing countries which Nigeria is a part of.

According to her, the report was speaking to the top ten countries which have benefitted the most from the Bank’s cheap loan programme.

“The World Bank’s Report was an assessment of the performance of IDA and not the performance of the IDA Loans nor the debt repayment capacity of the beneficiaries of IDA Loans,” Oniha told BusinessDay in a chat.

Oniha who rather saw the report on a positive light said what it meant is that “Nigeria is accessing the cheapest long-term loans for developmental needs, which is in line with the countries debt strategy.”

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Also in a statement, the DMO said its “attention of the Debt Management Office (DMO) has been drawn to the publication on Page 19 of The Punch Newspaper of Wednesday, August 11, 2021, captioned “World Bank lists Nigeria, nine others high-debt risk nations”.

“In the publication of The Punch Newspaper, it was stated that the World Bank has classified Nigeria as one of the top ten (10) ‘high-debt risk nations’ in the International Development Association (IDA) Audited Financial Statement for the Fiscal Year 2021 (July 1, 2020 – June 30, 2021) published on Monday, August 9, 2021.

“The publication of The Punch Newspaper is not only false and misleading but also suggests an inadequate understanding of the essence of the World Bank’s Report.

“By way of explanation, the World Bank through IDA, gives concessional loans to poor and developing countries to help them achieve improvements in growth, job creation, poverty reduction, governance, the environment, climate adaptation and resilience, human capital, infrastructure, and debt transparency. Nigeria is a beneficiary of IDA Loans.

“It is important to re-emphasize that the World Bank’s Report, which was misrepresented by The Punch Newspaper, was focused only on the composition of IDA’s Loan Portfolio and did not make any reference to the debt sustainability of the top ten (10) beneficiary countries of IDA Loans, such as India, Pakistan, Nigeria, Kenya and Ghana that the Newspaper erroneously referred to as ‘high-debt risk nations’.

IDA Loans are typically for Tenors of 30 – 40 years, Grace Period (moratorium on principal repayment) of 7 – 10 years and Service Fee of only 0.75%.

“The highly concessional nature of IDA Loans satisfies the requirements of the provision of Section 41(1)(a) of the Fiscal Responsibility Act, 2007, which states that Government at all tiers shall only borrow on concessional terms with low interest rate and with a reasonably long amortization period. The cost of IDA Loans, which is the Service Fee of 0.75%, is considerable low thereby moderating the cost of debt service.

“The DMO wishes to state that Nigeria’s IDA’s Debt Stock as at June 30, 2021 was USD11.7 billion. IDA Loans represent one of the most favourable borrowing options for countries like Nigeria and is also consistent with the Medium Term Debt Management Strategy of the Federal Government.