*Senator Says Total Debts Now Stand at $60bn
Amid dwindling oil prices and consequent revenue falls, Nigeria has been reported to use about 80 percent of her revenue to service debts, according to the Islamic Development Bank (IDB).
Abdallah Mohammed Kiliaki, representative of the IDB, said that though Nigeria’s debt to GDP ratio is low at 17 percent, the resources being used to pay the debts are huge. This is just as Senator Shehu Sani, Chairman, Senate Committee on Foreign and Local Debts, revealed that Nigeria’s total debts stand at $60 billion.
In 2004, prior to the Paris Club debt relief, Nigeria’s overall debt stock was $46.2 billion which is $13.8 billion less than the current stocks, meaning the current debt profile is way ahead of the pre-debt relief era.
Kiliaki, who was on a courtesy visit to the senator, said the IDB looks at the debt profile of a country before giving contractual financing and advised Nigeria to broaden the scope of her resources in order not to get suffocated by debts.
“My visit is very crucial because we need to look at the debt profile of a country before we give it new contractual sort of financing. We also work closely with the International Monetary Fund and the World Bank to ensure that our financing has the required threshold of grant financing which is normally 35 percent but at the same time there is financing that is not a burden to a country to the extent that the debt may not be sustainable.”
According to him, unsustainable debt means that a country or a borrower is unable to pay, that the IDB takes very serious note of that.
“When you look at the debt to GDP ratio of Nigeria, it is very low at 17 percent compared to Italy (150 percent) and the United States (100 percent).
But when you look at the revenue of the government viz a vis the ratio to the total debt, I think Nigeria pays about 75 to 80 percent of its revenue to service debt, so, this is very, very high compared to other countries where they use just 10 percent,” he said.
“What this means is that one, the government of Nigeria needs to expand or mobilise additional resources through taxation by broadening the tax base,”
“What this means is that one, the government of Nigeria needs to expand or mobilise additional resources through taxation by broadening the tax base,”
Kiliaki said, adding that lenders and financiers need to reconsider conditions of financing, meaning that they should try as much as they can to extend to Nigeria financing that will not make it difficult for the country to pay back.
“In a nutshell, as clearly shown by available financial records, Nigeria still has considerable leverage of taking loans from multilateral financial institutions for development or investments purposes going by her very encouraging low ratio of debts servicing to GDP, but the factor of dwindling revenues being used to service the debts must be urgently looked into by way of possible expansion,” he pointed out.
He declared that the recent visit of the 19 states governors to the Head Office of the Bank in Jeddah, Saudi Arabia, for rehabilitation assistance for the Internally Displaced Persons (IDPs) in the North Eastern states, has no financing envelope agreement yet.
According to him, even if the Northern States governors had approached the bank for definite financial assistance, there was no way the Federal Government would not be carried along.
On his part, Senator Shehu Sani urged the bank and other multilateral financial institutions to stop propping the country into taking more loans on account of its low debts to GDP ratio, saying that what is 17% today may go up to 77% if not controlled, thereby returning the country back to where it was before 2006 when London and Paris club wrote off substantial part of the country’s foreign debts.
“In a nutshell, as clearly shown by available financial records, Nigeria still has considerable leverage of taking loans from multilateral financial institutions for development or investments purposes going by her very encouraging low ratio of debts servicing to GDP, but the factor of dwindling revenues being used to service the debts must be urgently looked into by way of possible expansion,” he pointed out.
He declared that the recent visit of the 19 states governors to the Head Office of the Bank in Jeddah, Saudi Arabia, for rehabilitation assistance for the Internally Displaced Persons (IDPs) in the North Eastern states, has no financing envelope agreement yet.
According to him, even if the Northern States governors had approached the bank for definite financial assistance, there was no way the Federal Government would not be carried along.
On his part, Senator Shehu Sani urged the bank and other multilateral financial institutions to stop propping the country into taking more loans on account of its low debts to GDP ratio, saying that what is 17% today may go up to 77% if not controlled, thereby returning the country back to where it was before 2006 when London and Paris club wrote off substantial part of the country’s foreign debts.
