By ODUNEWU SEGUN
NIGERIA’S trouble economy is entering more uncertain times as its plans to secure more loans to implement the 2016 budget may be hinder by its rising debt profile which now stands as at June 30, 2016 at N16.3 trillion, up N12.6 trillion at the end of 2015.
The huge debt, comprising both external and domestic debts, is 13 per cent of the nation’s Gross Domestic (GDP) with domestic debt constituting about 86 per cent of the debt owed by the States and the Federal Government, while external debt makes up the remaining 14 per cent.
According to a report released by the Debt Management office (DMO) last week, the debt owed by the 36 States and Federal Capital Territory constitutes 33 per cent of the external debt and 16 per cent of the total domestic debt, while the Federal Government accounts for the balance.
It puts the domestic debts taken by the State governments at N2.5 trillion with Lagos, Delta, Cross River and the Federal Capital Territory topping the list.
According to the report, the rise in debt does not mean that the State and Federal Governments made more borrowing, but that the previous debt profile was affected by the slide in the value of the naira. It said the debt, in dollar terms, declined from $65.43bn in 2015 to $61.45bn in 2016, adding that as at the end of 2015, debt, in dollar terms stood at 13.02 per cent of the country’s gross domestic product(GDP) while in 2016, it rose to 16.83 per cent, based on 2015 GDP figures.
Although the Debt Management Office (DMO) through its Director-General, Dr. Abraham Nwankwo, has assured Nigerians that the country is no at risk, but the continuing increase in the nation’s indebtedness is troubling. If not properly managed, the rising debt portends an even gloomier future for the ailing economy.
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Failure to heed this time-tested wisdom of borrowing cautiously and spending prudently might worsen Nigeria’s already terrible macroeconomic outlook. The beginning of wisdom is for government’s economic managers to reflect on what led to the present economic predicament and chart the way forward.
Nigeria’s problem is traceable to the failure of successive governments to prudently manage its huge earnings during the oil boom days, and keep down the cost of governance. Today, oil prices have dipped so sharply and crude oil production has declined significantly as a result of the crisis in the Niger Delta.
Even though the borrowing ratio to our Gross Domestic Product (GDP) is still within acceptable international threshold, the worry of many Nigerians worry is the revolting culture of financial indiscipline by government officials.
According to experts, this trying times call for policy makers to deepens Nigeria’s economic diversification efforts, ensure prudent management of resources, plug all leakages and prioritise projects that have direct bearing on the welfare of the people and the overall development of the country.