Nigeria’s economic crisis continues to
become worse with the Federal Government borrowing N882.12bn so far to
finance the 2015 budget deficit.
The amount, sourced internally, included what was budgeted for internal and external borrowing for the fiscal year.
The Permanent Secretary of the Ministry
of Finance, Mrs. Anastasia Daniel-Nwaobia, said this in her presentation
to the House of Representatives Ad-Hoc Committee on Non-Implementation
of Capital Projects in the 2015 appropriation in Abuja on Tuesday.
The national economic crisis and the
attendant depreciation of the Naira, increase in interest rates and
inflation, may not end soon with the figures from the National Bureau of
Statistics indicating that the Gross Domestic Product earlier projected
to grow at a rate of 5.5 per cent (as of January 2015) now stands at
2.63 per cent as of June 2015 .
This,
the Permanent Secretary, who was represented by the Director General,
Budget Office of the Federation, Alhaji Aliyu Yahaya Gusau, said, “is
not unconnected with the global slowdown and its attendant impact.”
“The economy is not expected to
outperform global growth rate of 3.3 per cent. Significant drop in oil
price has led to exchange rate depreciation, pushing the dollar to N197
as of June 2015. This has led to the adoption of stringent measures in
fiscal and monetary policies to ensure stability in the economy,” she
explained.
On debt management, she said, “Public
debt to GDP ratio as of 2013 was 10.82 per cent, and that the total
amount of N882.12bn appropriated for both domestic and external
borrowing has been fully raised to finance the 2015 budget accordingly.
“Debt service to revenue ratio however
needs to be kept under close watch. Given that it was 19.63 per cent by
the end of June 2015 against the cognate arbitrary threshold of 28 per
cent.
“External debt as of June 30, 2015 stood
at $7.74bn and $3.42bn for states and the FCT; bringing it to the total
amount of $8.31bn.”
The Debt Management Office had put the Federal Government’s total domestic debt as of December 31, 2014 at N7.9tn.
With N882.12bn borrowed from domestic sources already in 2015, the Federal Government’s total domestic debt comes up to N8.79tn.
The PUNCH had exclusively
reported on July 27 that the country’s total debt stock stood at
N12.12tn as of June 30, 2015 with the domestic debt of the Federal
Government accounting for N8.39tn.
Director General of DMO, Dr. Abraham
Nwankwo, at a press conference in May 2013 to unfold the details of the
nation’s Middle Term Debt Management Strategy approved by the Federal
Executive Council, had said the domestic debt of the country was too
high compared to the foreign debt component.
He said there was an urgent need to
rebalance the structure of the nation’s debt because the interest rate
payable on domestic debt was too high.
As of 2013, the ratio of the Federal
Government’s domestic debt stood at 88 per cent while the ratio of the
foreign debt stood at 12 per cent.
Nwankwo said the appropriate ratio
should be 60 per cent for domestic debt and 40 per cent for foreign
debt, adding that the newly-approved Medium Term Debt Management
Strategy would seek to achieve this ratio.
The DMO boss said the time of high
borrowing from the domestic market had served its purpose, which
included developing a market structure and culture for long-term savings
and investment.
“The delisting of Nigeria from the JP
Morgan index watch has further heightened the fear of currency
devaluation, import restriction and inflation,” Nwaobia also said.
Speaking specifically on the performance
of the 2015 budget, the permanent secretary explained that N3.45tn was
budgeted for 2015 out of which capital appropriation was N557bn.
She said of this amount, N194.49bn has been released as of September 15, representing 34.89 per cent of total releases.
Members of the House Committee expressed
dissatisfaction with the ministry’s presentation, noting that it was
“sketchy and lacked essential details.”
Chairman of the committee, Aliyu Patigi,
said, “My own view of the presentation is that it is very sketchy and
does not give a holistic view for full understanding of what the 2015
budget implementation is all about.
“We had expected you to provide vivid
insights into the regime of import duty waiver, using explanatory notes
to describe how and what was done and why.
“You have not done that and we can’t say
for sure that the position you presented before us is the right one
because each day companies keep declaring profits running into hundreds
of billions and yet they are given incentives and waiver when sectors
such as the textile industry has no such consideration for revival.”
He asked officials of the ministry to
ensure that the details sought were provided during the next hearing
slated for Tuesday, September 22.
He further said, “On domestic debt of
N8.396tn, we are interested in knowing who the Federal Government is
indebted to, what necessitated this huge amount of borrowing as well as
how this money so borrowed was spent. We also want to know from when to
when this debt accumulated and how this amount will be liquidated in
both short and long terms,” Patigi said.
0 comments:
Post a Comment