Recently, the federal government disclosed that it spent a whopping $297.33 million (N47.57 billion) to service its debts owed multilateral institutions. This is mind boggling, especially against the backdrop of the nation’s ever depleting foreign reserve. Is it not curious that data from the Central Bank of Nigeria, CBN, a couple of months ago showed that the nation’s reserves, which were $42.77 billion as at February 3, dropped to $39.72 billion by March 3,. Sadly, this is the lowest level since November 2012. The development is worrisome. The Budget Office, in its 2013 consolidated budget implementation report, put the country’s external debt stock as at December 31, 2013 at $8.821 billion, an increase of 6.75 per cent over the $8.264 billion recorded in the third quarter of the year. It is disturbing that debt servicing is eating deep into the external debt stock. The report, jointly signed by Minister of Finance, Dr. Ngozi Okonjo-Iweala, and Director-General, BOF, Dr. Bright Okogu, said the $297.33 million was used to settle debt obligations to institutions such as multilateral creditors, and non-Paris Club bilateral creditors, among others.
It showed that $143.02 million (48.1 per cent) was paid to multilateral creditors; $40.95 million (13.77 per cent) was paid to non-Paris Club bilateral creditors; $71.63 million (24.09 per cent) to commercial and ICM (Eurobond) creditors; and $41.73 million (14.03 per cent) to others. The report showed that multilateral debts amounted to $6.275 billion (71.13 per cent), non-Paris Club bilateral debts amounted to $1.025 billion (11.63 per cent), while commercial (Eurobond) accounted for the balance of $1.521 billion (17.24 per cent). While the report said this consists of $8.82 billion (N1.37 trillion) or 13.68 per cent for external debt, and the balance of $55.69 billion (N8.67 trillion) or 86.32 per cent for the domestic debt stock, it noted that the total net value of debt/Gross Domestic Product (external and domestic) ratio as at December 2013 was, however, significantly below the global threshold of 40 per cent at 12.52 per cent.
Presenting the two-year performance of the Finance Ministry, Okonjo-Iweala said that $12 billion (N1.92 trillion) funding agreements was sealed by the federal government to finance the real sector of the economy. The amount, she said, was sourced from financial institutions such as the World Bank, African Development Bank, China Export-Import Bank and Islamic Development Bank at concessionary single digit interest rates on 40 years moratorium. The beneficiary sectors are agriculture (N202 billion); environment (N91.2 billion); transport (N640 billion); water resources (N126.03 billion); Niger Delta (N50 billion) and health (N30.35 billion). Others are power (N451.12 billion); education (N39.97 billion); information and communication technology (N16 billion) and job creation (N94.4 billion), aviation, housing, Federal Capital Territory and works, where N80 billion, N48 billion, N80 billion and N44.8 billion have been secured, respectively.
Incidentally, Okonjo-Iweala in July 2012, stressed the need for Nigeria to shore up its external reserves to $50 billion before the end of 2013, because the reserves needed to be strong enough to help the country against any global economic recession in the foreseeable future. Therefore it is pertinent for Okonjo-Iweala and her team to take steps towards reducing the country’s foreign and even domestic debts and concentrate on increasing our external reserves. To this end, we recommend price and exchange rate stability, which enhances the direction of our foreign trade and foreign reserves, diversification of the economy from oil to non-oil revenue earnings; patriotic consumption of locally made goods and services by both governments and the people of Nigeria, to stimulate and sustain local productivity,a good and improved infrastructural environment, ICT, power, transportation/roads and quality education.
