DIRECTOR-General of the Debt Management Office (DMO), Dr. Abraham Nwankwo, has disclosed that the country’s external and local debts have risen to N12 trillion ($65 billion). He added that the debt ratio to Nigeria’s Gross Domestic Product (GDP) was still 13 per cent.
Deliverying a lecture at a one-day seminar on Debt Sustainability and the Challenge of Financing Economic Recovery, organised by the DMO for the Nigerian Union of Journalists (NUJ), Dr. Nwankwo maintained that the country was not at risk and that there was no cause for alarm.
While breaking the debt profile, he said out of the N12 trillion owed by both states and the Federal Government, about 86 per cent was domestic while the other 14 was external.
Dr. Nwankwo went further to explain that the 36 states owed about 33 per cent of the external debt and 16 per cent of the domestic debt. He said the other percentage was owed by the federal government.
“This is coming at a time that the country is going through a difficult time. Nigeria’s debt ratio to the GDP is about 13 per cent. As at the end of December 2015, the debt profile of Nigeria stood at N12 trillion. In dollar equivalence, it stood at $65 billion. This includes both local and foreign debts. It also includes that of the state and federal governments. About 86 per cent of Nigeria’s current debt is domestic.
“After the debt cancellation between 2005 and 2006, government came up with a policy that borrowings should be done domestically in order not to put all our eggs in one basket. That will enable us to borrow outside when there is a rainy day.”
Speaking on ways to generate more funds for the government, the DMO boss said there was need to harness the tax potentials of the country, adding that individuals and corporate bodies need to be encouraged to pay their taxes regularly.
“Therefore, debt sustainability and overall economic sustainability can be significantly influenced by individuals and corporates organisations paying various taxes fully. Nigeria is not collecting enough taxes as it should be doing. We have the biggest economy in Africa, but the taxes we collect are not commensurate with the GDP.
“Those evading taxes should be brought into the tax bracket and ensure they pay fully. Those in the informal sector should be brought in to pay taxes. In modern economies, almost every government borrows to fund the budget. In the 2016 budget for instance, the Federal Government is expected to borrow N900 billion externally, while N984 billion will be sourced internally,” he said.
He said for the country to meet with the high demands of infrastructural deficit, over $25 billion would be needed annually. He advised government to device a means through which the infrastructure could be massively funded within the next five to 10 years.