The federal government says it plans to drastically cut down on its borrowing spree in the 2019 fiscal year, as the nation is trying to manage the struggling economy.
It will be recalled that the Federal Government through Udo Udoma only a few days ago, at the IMF and World Bank Group meeting in Bali, Indonesia claimed that the nation might seek for more loans, if the need arises, describing Nigeria as one the countries with the lowest debt profiles in Africa.
The Minister of Budget and National Planning, Senator Udoma Udo Udoma, who revealed this at a public consultation on the 2019-2021 Medium Term Fiscal Framework (MTEF) and Fiscal Strategy Paper (FSP) in Abuja, explained that borrowing was critical when the country was short of funds to bring out the economy from the recession it entered in the second quarter of 2016.
He said borrowing was directed at capital projects and it worked, noting that the activities on the Lagos-Ibadan rail lines and others were a direct effects of the borrowing.
Nigeria’s penchant for borrowing in the past few years has seen the nation’s debt stock soared in the past few years.
According to the National Bureau of Statistics (NBS) in its Nigerian Domestic and Foreign Debt report for the second quarter of 2018, Nigeria’s total debt stock as at the end of June 2018 (36 States and Federal Government debt) stood at $73.21 billion (N22.38 trillion), compared to $74.28 billion (N22.71 trillion) in the first quarter of the year.
According to the NBS report, Nigeria’s total external debt stock stood at $22.08 billion (N6.75 trillion) as at the end of the period ending June 2018. This shows a quarter on quarter debt growth of 0.05% from $22.07 billion in the period ending March 2018.
However, out of Nigeria’s total foreign debt of $22.08 billion as at the end of the second quarter of 2018, Federal Government accounts for $17.83 billion, which is 80.76% of the total foreign debt stock. The 36 states and the FCT account for the remaining 19.24% of the nation’s total foreign debt portfolio, with a joint debt of $4.25 billion.
Meanwhile, the report equally indicates that Nigeria’s total domestic debts as at June 2018 were N15.63 trillion ($51.12 billion). This shows a quarter on quarter growth of 24.24% from N12.58 trillion in Q1 2018.
The 36 states and FCT accounted for N3.47 trillion ($11.37 billion), while the Federal Government was responsible for N12.12 trillion ($39.75 billion).
The International Monetary Fund had last week warned Nigeria and other Sub-Saharan countries to check their rising levels of debts, diversify their revenue bases or face economic crisis.
The Bretton Wood institution also advised the most populous black nation to guard against the temptation to let higher oil prices delay reforms, warning that despite the recent recovery, oil prices are projected to remain below the 2013 peak.