The Debt Management Office (DMO) on Thursday cautioned on ballooning debt crisis coming from long years of financial indiscipline.
Patience Oniha, the newly appointed DG of DMO gave the caution as she received Edo state governor Godwin Obaseki, in her office in Abuja.
Nigeria’s ballooning debt stock is raising wide concerns that the county could be thrown into another debt crisis.
Government data show that the country’s debt stock has risen to N19 trillion, accounting for 20 per cent of the Gross Domestic Product (GDP).
States’ domestic debt alone as at March 2017 stood at almost N3 trillion.
Oniha said the country cannot continue this way, calling for a more strategic management of public finance.
“It is no longer business as usual. We can’t collect money from FAAC (Federal Accounts Allocations Committee) and, borrow and continue and wait until the next month.
“At various levels, we need to be more strategic and more creative in the things that we do,’ she said at the brief meeting.
The federal government has projected a N2.32 trillion deficit for 2017 fiscal year to be financed through N1.25 trillion domestic borrowing and N1.06 trillion foreign borrowing.
Just last week, the Central Bank of Nigeria (CBN) raised an alarm that the country’s fiscal deficit rose substantially to N2.51trillion within the first half of 2017 alone, warning of an impending economic relapse on sluggish fiscal actions.
Oniha recalled the debt challenge the country faced before the debt management office was created in 2000, “so we have come a long way from when debt was unsustainable,” she said.
“Where we are presently and have major challenges is that previously, we could rely on monies from FAAC and in addition we could borrow, both at the federal and state levels, it wasn’t a challenge.
“But I think the times have changed. Revenues are under severe pressure. We are still very dependent on on-oil revenues. Non –oil revenues are picking up but that is a journey.
“It means that now and for the future, we need to do things more differently. We need to be more strategic in the management of public finance.”
She said the DMO, in addition to providing service to the federal government, also partner the states on dent sustainability.
“We know that for the external debt, the sovereign manages all of that borrowing because the laws recognize that it is the federal government that should be responsible for all external borrowing for the country.
The debt management office also provides services to the states when they want to borrow either in form of guarantees or when they want to issue bonds in the domestic market,” according to her.
She said beyond that, the DMO works in close poartnership with the state governments to share experiences acquired over the years in managing public debt.
She, however, commended Edo state for compliance on all the three major requirements for debt sustainability, including giving an update on their domestic data.
She said while we government has initiated non-oil revenue, controls on costs, states also needed to do same.
“I am aware that states like Edo have also embarked on a number of economic initiatives.”
Governor Obaseki also corroborated the DG’s views on a possible debt crisis if not managed now.
He said he understands the role the DMO plays in the economy and the challenges the country face.
“I know the challenges we face in the country. I see the balance sheet of the federal government.
“These are really tough times in this country. When you look at the budget and you see that we have to spend N1.8 trillion on debt service which is significant amount compared to our earnings, you know we are in trouble and we need somebody who is clear headed like Patience, who is deep and has integrity to see us through this mess, because if we continue at this rate, we may not be able to survive it,” he stated.
The governor ruled out the possibility of Edo state going back to the bond market to borrow considering the present high interest rates.
“Our bond expires at the end of this year, we would sit and look through our fiscal plans and make determinations at that point whether we want to go back to the market. But the way things are, and except interest rates come down, we are not likely to go to the bond market because we may not be able to sustain the debt service,” he stated.
The governor, however, said Edo state is committed to good governance, transparency while being accountable to the people who voted them into power.
He said the state is committed to sustaining fiscal discipline, and that Edo state’s Internally Generated Revenues today stands at N2billion but that his government intends to grow it much larger than this figure.
He said his administration is focusing on a six point agenda, including building institutions, agriculture, infrastructure, education, health care, focusing majorly on Primary Health Care, as well as the environment.
Onyinye Nwachukwu, Abuja
