BY SUNDAY ISUWA and MARK ITSIBOR, Abuja
With little or nothing to show for it, the federal and state governments and the federal capital territory (FCT) have acquired a debt profile of over N20.312 trillion comprising both external and domestic borrowings between June 2015 when the Buhari administration took over office and December 2020.
According to official figures from the debt management office (DMO), Nigeria’s debt was N12.603 trillion as of June 2015, but the total public debt on December 31, 2020 rose to N32.915 trillion, including the debt stock of the federal and state governments, as well as the federal capital territory.
It became obvious that the debts would continue to pile up yesterday as the Senate approved fresh borrowing of $1.5 billion and €995 million for both the federal and state governments from foreign market.
When calculated at the CBN official exchange rate of $1 to N381, the said loan amounts to N1.02 trillion.
Between June and December 2016, both tiers of government took a total loan of N4.75 trillion, from which external debt gulped N1.36 trillion
In that year, the federal and state governments took domestic loans of N2.22 trillion and N1.17 trillion respectively.
From N2.36 trillion in 2017, N2.01 trillion in 2018 to N1.61 trillion in 2019 and N4.20 trillion, federal government’s debt alone has been on the increase.
A further review of the debt profile of the 36 states, FCT and the federal government showed that they borrowed the total sum of N3.138 trillion in 2017.
While the total external debt for the year amounted to N2.3 trillion, the federal government borrowed N1.53 billion, with the sub-national government also taking a summed loan of N52 from the domestic market.
According to figures that were obtained by LEADERSHIP yesterday, 2018 saw the loan portfolio grow by N2.01 trillion.
Out of that, the federal government and the states borrowed N19 billion and N51 billion accordingly from the domestic market, while another N1.97 trillion was jointly borrowed from the foreign market.
The government’s decision to borrow more from the foreign market was informed by concern that the government was crowding out private sector loans with its secured bonds.
From the total of N2.102 that was borrowed in 2019, external debt was N1.27 trillion.
On the domestic market alone, the federal government took loan of N1.50 trillion, with the states and FCT taking the balance of N25 billion.
In 2020, the federal government borrowed N1.75 trillion from the domestic, while the states and FCT took about N8 billion.
Another N3.6 trillion was borrowed from external sources, including $3.4 billion draw-down from the International Monetary Fund (IMF).
Yesterday’s approval of the new loan facility by the Senate followed the consideration and adoption of a report of the Senate Committee on Local and Foreign Debts, chaired by Senator Clifford Ordia (Edo Central).
The report did not list the states that would benefit from the external loan.
The approval is part of the external borrowings request President Muhammadu Buhari had in May 2020 sent to the Red Chamber.
The loan is to finance various priority projects of the federal government and to support the state governments facing fiscal challenges.
Presenting the report, Ordia said $1.5 billion will be sourced from the World Bank to finance projects of state governments facing fiscal challenges arising from the COVID-19 pandemic.
He listed the projects to include States Fiscal Transparency, Accountability and Sustainability programme to provide fiscal support to states (SFTAS) and COVID-19 Action recovery and economic stimulus programme to support State-Level efforts to protect livelihoods, ensure food security and stimulate economic activity (N-CARES).
The €995 million to be sourced from the Export-Import Bank of Brazil is to finance the federal government’s Green Imperative Project to enhance mechanization of agriculture and agro process in Nigeria to improve food security.
Ordia said the borrowings are largely concessional loans with low interest rates and a reasonable moratorium and payback period.
He stated: “The Committee most importantly notes that the indicative terms and conditions under which the loan will be borrowed, there are no unusual or onerous conditions attached and the terms do not in any manner compromise the sustainability of the Nigerian economy or impugn the integrity and independence of Nigeria as a sovereign Nation.
“The Committee finally notes that the Loan is in the immediate best interest of the Nigerian State and its citizens in dealing with the COVID-19 pandemic in a way that the economy will be positioned for quick recovery and resume growth.
“The Committee notes that while Nigeria’s Total Public Debt Stock is on the increase, it is still relatively low vis-d-vis the country’s GDP and the increased borrowing requirements is needed to sustain the economic recovery.”
After the approval, Senate President Ahmad Lawan urged the relevant committees of the State House of Assemblies to monitor the projects the funds would be used to execute.