In attempt to allay the fear that servicing the country’s debt with N293bn which is about 70% of the total national income, Accountant General of the Federation, Ahmed Idris, has stressed that the payment will not cause any problem to the economy.
While on a visit to the Emir of Kano, Muhammadu Sanusi 11, Idris explained that the federal government has initiated some strategies to cushion the effect of the debt profile.
“It is always a burden paying debt and anyone paying debt would know that he is just meeting a burden which has to be met in line with the agreements, some local and international debts, but we just have to abide by all our agreements and obligations.”
Recently, the African Development Bank (AfDB) revealed that debt servicing gulps more than 50% of Nigeria’s revenue. According to AfDB, the average revenue spent by West African countries on external debt servicing is 17%. This is high and even higher in Nigeria which spends about 50% revenue on external debt servicing.
According to the AfDB, the rapid increase in external indebtedness remains a challenge, especially given the shift toward non-concessional external debt. Debt service payments have also increased since 2010 and are projected to remain high in the medium term.
Further analysis of Nigeria’s debt service data obtained from the Debt Management Office (DMO) shows that the total external debt servicing stood at $194.4 million or N69.9 billion as at the end of 2018, while the domestic debt service was estimated at N223.3 billion at the end of 2018.
This means Nigeria’s total debt service (domestic and external) as at the end of 2018 stood at N293.3 billion.
Debt servicing is biting hard, and the Accountant General admitted to this fact. While further reacting to claims that Nigeria only accesses 30% of its revenue generated to meet the expenditure, Ahmed stressed that the government is deploying strategies to overcome the challenges being faced in terms of revenue generation.
“There is a number of ways the Federal Government is deploying to boost its revenue generation drive. The strategic revenue growth initiative under which all the revenue generating ministries, parastatals are given portfolios to meet revenue targets.
“All these agencies are given the responsibilities to generate and they are working assiduously to meet up their revenue portfolios.”
The Bottom line is while Nigeria’s debt servicing is rising and becoming worrisome, Ahmed has assured that the Federal Government is putting in place a strategic plan to boost the revenue generation of the nation.