The Minister of Finance, Dr. Ngozi Okonjo-Iweala, on Monday expressed concerns over the increasing rate of the nation’s domestic debt, and stated that about 19.87 per cent of the country’s projected revenue for 2014 would be spent on debt servicing.
Okonjo-Iweala, who was briefing the private sector on the performance of the economy at a breakfast dialogue organised by the Nigerian Economic Summit Group in Lagos, however, said the ratio of the nation’s public debt to the Gross Domestic Product was still at a moderate level.
The minister said, “Sovereign debt position remains strong and sustainable but concerns exist over the build-up of domestic debt. Debt service is rising; debt service to revenue is a concern.”
She said the government had projected to spend a whopping sum of N712bn on debt servicing in 2014, up from N495bn spent on debt servicing in 2011.
The amount, she noted, represented about 19.87 per cent of the N3.583tn revenue projected in the 2014 budget.
According to her, the sums of N559.5bn and 591.8bn were spent on debt servicing in 2012 and 2013 respectively, and represented debt service to-revenue ratio of 15.71 per cent and 14.43 per cent respectively.
According to a presentation made by Okonjo-Iweala at the meeting, Nigeria’s public debt stock as of September 30, 2013 was N8.32tn ($53.42bn), of which external debt stock represented N1.287tn ($8.26bn) while the domestic debt stock was N7.032bn ($45.15bn).
However, she stressed that looking at the total public debt as a ratio of the GDP, the debt was still sustainable.
“The solvency ratio is moderate; Peer Group Threshold for total public debt to GDP is 56 per cent while Nigeria’s actual is 20.20 per cent,” she noted.
The Federal Government plans to spend a whopping N2.08tn to service its debts in the next three years.
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FG to spend 20% of revenue on debt servicing by ngcareers