The Minister of Information and Culture, Alhaji Lai Mohammed, has dismissed fears raised by former vice president Atiku Abubakar about the sustainabilty of the country’s rising debt, especially as compared to dwindling revenue.
In a statement on Wednesday, the minister questioned where Atiku got his figures from, suggesting that the debt figure to revenue ratio of 99 per cent in the first quarter of 2020 quoted by Atiku was not in the Medium-Term Expenditure Framework and Fiscal Strategy Paper.
Mohammed said the bleak picture painted by Atiku was misleading and not based on factual information.
He said, “We are also not able to ascertain the source of the first quarter figures of N943.12 billion for debt servicing and N950.56 billion for retained revenue, which he also quoted.”
He said provisions were made in the budget for both debt servicing and debt repayment which include principal repayments, interest payments and all other applicable charges.
He said the government had introduced policies to increase revenues such as the passage and implementation of the Finance Act, 2019, various on-going reforms in the Oil and Gas, Tax Administration and Collections, as well as the Strategic Revenue Growth Initiatives.
Atiku had on Tuesday claimed “revelation from Nigeria’s First Quarter 2020 financial reports in the Medium Term Expenditure Framework and Fiscal Strategy from the Federal Ministry of Finance, Budget, and National Planning, which shows, alarmingly, that whereas Nigeria spent a total sum of ₦943.12 billion in debt servicing, the Federal Government’s retained revenue for the same period was only ₦950.56 billion. This means that Nigeria’s debt to revenue ratio is now 99%.”
He said, “No one should be deceived. This is a crisis! Debt servicing does not equate to debt repayment. The reality is that Nigeria is paying only the minimum payment to cover our interest charges. The principal remains untouched and is possibly growing.
“We are at a precipice. If our revenue figures do not go up, and go up quickly, Nigeria risks a situation where our revenue cannot even sustain our debt servicing obligations. Meaning that we may become insolvent, and our creditors may foreclose on us, as has occurred in Sri Lanka and the Maldives.”
The former vice president said, “In my opinion editorial of December 17 2019, titled ‘Endless Borrowing Will Lead Nigeria to Endless Sorrowing’, I had cause to counsel the Federal Government to desist from indiscriminate lending, and offered suggestions on ways to both increase revenue and reduce expenditure. However, my counsel fell on deaf ears”
He said the federal government could not continue to justify these unsustainable numbers by pointing at Nigeria’s debt to GDP ratio.
“That is only half the picture. Our debt to revenue ratio paints a much more realistic portrait of our financial situation, especially as our revenues are majorly tied to a mono-product, oil and gas, which are very vulnerable to global shocks.
“Again, I warn that Nigeria is facing a crisis, and we cannot continue to keep up appearances by taking out more loans to prop up our economy. That will amount not just to robbing Peter to pay Paul, but to robbing our children to pay for our greed,” he stated.