May 30, 2023

Buhari’s huge parting debt profile(2)

oil subsidy

By Eric Teniola

From the article first published in 2021, this is the continuation from last week of the background of Prince Abdulaziz Attah, the permanent secretary in the ministry of finance when General Yakubu Gowon was Nigeria’s military head of state and how Nigeria has missed its way 16 years after celebrating debt relief from its international creditors. 

IN December 1970 he was appointed Administrative Officer (Principal Grade), and became Secretary to the Federal Military Government and Head of the Federal Civil Service. Alhaji Attah died on June 12, 1972 at the Royal Free Hospital, London. In July 2005, the Federal Ministry of Information celebrated the debt relief by publishing a pamphlet titled: BROKEN CHAINS.

Now 16 years after, we are back to square one. Sixteen years after we are back to ‘UNBROKEN CHAINS’. I do not know what will happen now, but certainly we have messed up. In terms of the management of our economy, we have missed our way. We are back to recession again. And in spite of the optimism being expressed by the outgone Minister of Finance, Zainab Shamsuna Ahmed, we do not know how to get out of the recession and when we are going to get out of it. Between 2005 and now, we cannot point to anything substantive we have done with the money we borrowed.

According to a report by Premium Times, Nigeria’s total public debt stock increased by about N2.38 trillion, or $6.593billion, as of June 30 last year. The report quoted the Debt Management Office, DMO, that the country’s total debt portfolio grew from about N28.628 trillion, or $79.303 billion, as of March 31 to over N31.009 trillion, or $85.897 billion, in the period under review.

Details of the increment, the DMO said, showed about $3.36 billion came from Budget Support Loan from the International Monetary Fund, IMF, while the balance are new domestic borrowings to finance the revised 2020 Appropriation Act. The new domestic borrowings include a N162.557 billion Sukuk and promissory notes issued to settle claims of exporters. The data showed the new debt figure comprised the debt stock of the Federal Government, the 36 state governments and the Federal Capital Territory.

The total external debt stands at about N11.363 trillion, or $31.477 billion, about 35.65 per cent of the overall outlay, against total domestic debt of about N19.945 trillion, or $54.419 billion, about 63.35 per cent of the total portfolio. Of the total external debt stock, the Federal Government accounted for N9.824 trillion, or $27.214 billion (about 31.6 per cent) of external debts; and N15.456 trillion, or $42.814 billion (about 49.84 per cent) of the domestic debts.

The states and the FCT owe about N1.539 trillion, or $4.263 billion (about 4.96 per cent) of the total external debt figure, and about N4.190 trillion, or $11.606 billion, (13.51 per cent) of the total domestic debt figure. The DMO said additional promissory notes would be issued in the course of the year, along with new borrowings by state governments which would further increase the public debt stock.

Details of the debts stock, showed that the multilateral loans category consisted IMF $3.359 billion, while the World Bank Group and African Development Bank, AfDB, Group $16.36 billion. The three financial institutions accounted for about 52 per cent of the country’s total $31.477.14 billion debt stock.

The breakdown of the debt to World Bank’s affiliate institutions showed International Development Association, IDA: $10.05 billion; and the International Bank for Reconstruction and Development, IBRD: $409.51 million.

Similarly, the debt to African Development Bank stands at about $1.326 billion; Africa Growing Together Fund, $0.14 million; African Development Fund, $921.91 million; Arab Bank for Economic Development in Africa, $5.88million; European Development Fund, $52.52million; Islamic Development Bank, $30.22million; and International Fund for Agricultural Development $201.68million.

On the bilateral level, Nigeria’s total debt to various institutions is about $3.949 billion, or 12.54 per cent of the total debt stock. They consist of those to Chinese financial institutions, including a Exim Bank of China, $3.241billion; French institutions (Agence Francaise Development), $403.65milion; Japanese (Japan International Cooperation Agency), $76.69million; India (Exim Bank of India), $34.87million; and Germany (Kreditanstalt Fur Wiederaufbua), $192.71 million.

Commercial instrument debts totaling $11.16.35 billion, which account for about 35.48 per cent of the total debt, include Eurobonds, $10,868.35bilion; and Diaspora Bond $300million

Further details of the total N15.456 trillion Federal Government debts stock by instruments of as at the date under review showed FGN Bonds of N11.241 trillion, or 72.75 per cent; Nigerian Treasury Bills N2.760trillion, or 17.86 per cent; Nigerian Treasury Bonds N100.988 bilion, or 0.65 per cent; FGN Savings Bond $12.984billion, or 0.08 per cent; FGN Sukuk N362.557billion, or 2.35 per cent, Green Bond N25.690billion, or 0.17 per cent, and Promissory Notes N951.740billion, or 6.16 per cent.

Details of the debts stock of the 36 states and the Federal Capital Territory stood at about N4.190 trillion, with Lagos, N493.32 billion; Rivers, N266.94 billion; Akwa Ibom, N239.21 billion; and Delta, N235.86 billion, among the top debtors in the country. The four states are among the richest states in the country. I grew up in an age that insists that he who goes a-borrowing, goes a-sorrowing. It was an idiom used by the American Nationalist, Benjamin Franklin (17 January, 1706-17 April, 1790). 

To be continued…