Nigeria’s Domestic, External Debts Now $44bn

Minister of the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala

By Ndubuisi Francis  in Abuja

The Federal Government declared yesterday that it was worried by the domestic debt stock and was working towards cutting it down from the current N5.96 trillion to about N500 billion by 2015.

Coordinating Minister of the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, who spoke at a briefing on the 2012 budget in Abuja, put the nation’s total debt stock at $44 billion; giving the breakdown as $5.9 billion external and N5.6 trillion domestic.
She stated that although the nation’s external debt profile was not bad as to cause panic, the rising domestic debt portfolio was getting uncomfortable.

“Over the medium term, we aim to bring our recurrent down to about 65 per cent of the budget while increasing capital expenditure. Based on the above, the deficit is now N1.1 trillion or 2.85 per cent of GDP, which is within the 3 per cent GDP threshold set by the Fiscal Responsibility Act. Accordingly, the provision for domestic borrowing has now come down to N744 billion compared to N852 billion in the 2011 Budget. This is quite a big achievement.

“This underscores the necessity to control the rising domestic debt profile which has been a source of concern and I want to use this as an occasion to also say a word on the debt. We have provisioned N559.6 billion for domestic and foreign debt service. At present, our external debt stands at $5.9 trillion, while our domestic debt is N5.96 trillion. In naira terms, both domestic and external debt stand at N6.8 trillion or in dollar terms, $44 billion. In looking at this, we have to note that the various ratios which we monitor are in reasonable shape.

“Our debt to GDP is 17.8 per cent, which is far below the 30 per cent target that we have set for this economy and much below the 60 per cent of the target that is the international norm. Our debt service to revenue is 19 per cent as against the general norm of 30 per cent.

“When we look at our debt ratios, I want to say that we are reasonably in good shape. But we do want to emphasise that we continue to be concerned about the domestic debt and it is because of this that we are determined, in this budget exercise, in the medium term, to bring domestic borrowing down, particularly in the light of the high interest rates that we  are now experiencing,” the minister said.

Okonjo-Iweala said her ministry was discussing with the Petroleum Products Pricing and Regulatory Agency (PPPRA) and the Nigerian National Petroleum Corporation (NNPC), among others on the N231 billion said to be outstanding as subsidy payment from 2011.

According to her, the agencies involved said the amount, which is already built into the N888.1 billion subsidy for this year might not be the actual outstanding for last year as it might be higher than that. The minister noted that this overhang might pose another challenge.

She disclosed that the Federal Government was resolute in cutting down recurrent expenditure and increase capital expenditure, adding that over N14 billion had so far been saved through the introduction of the Integrated Personnel and Payroll System (IPPS), which had reduced the incidents of ‘ghost workers’ in the public service.

The minister, who also spoke on judgment debt, said it was a source of concern to the Federal Government, adding that while N12 billion was budgeted for judgment debt in 2012, the backlog actually stands at N80 billion.

She said going forward, the government would no longer provide for such in subsequent budgets as it might be a source of cheap money for some individuals, stressing that individual ministries, departments and agencies (MDA), which attracted such judgment debts may bear the burden.The minister said the government was engaging the services of renowned accounting and audit firm, KPMG, to help clean the nation’s pension system, among others.

In his breakdown of the 2012 budget, the Director General of the budget Office of the Federation (BoF), Dr. Bright Okogu, expressed concern over the rising personnel cost, attributing that to the last year’s salary increases for civil servants and other categories of public service workers.

He advised the ministries, departments and agencies (MDAs) to spend their votes as they are released and avoid asking for an extension of the budget cycle by three months or returning already released funds meant for capital projects.