Patience Oniha, who is the Director-General of Nigeria’s Debt Management Office (DMO), has stated that Nigeria has been grappling with budget deficits for decades.
She made this statement During an interview with Channels Television on Wednesday. Oniha said, As a result, the government has resorted to borrowing from both multilateral and bilateral sources, and has also issued promissory notes without adequate revenue to support them.
While acknowledging that borrowing is a legitimate way of financing government activities, Oniha emphasized the need for balanced borrowing and revenue generation. She further noted that if borrowed funds are prudently utilized to stimulate economic growth, the resulting increase in revenue can be utilized to repay the debt.
Patience Oniha noted that “Nigeria’s debt stock is N46.25trn. It includes the debt of the 36 state government and the Federal Capital Territory. The Federal Government is responsible for 84% to 85% of this.
“What are triggers and why is the debt stock growing because when the debt stock is growing, debt service also grows.
“The debt stock is growing because Nigeria has been running a budget deficit for many decades. In good and bad times with oil prices we have borrowed. We’ve been running budget deficits and those deficits are funded largely 85 to 95% from borrowing and that is cumulative. These are publicly available data.
“As we borrow each year, it adds up. So, the annual budget deficits are a major component. If you look at this year’s budget, budget size is N21trn, borrowing is N10trn.”
“The third part – government has been issuing promissory notes to settle obligations for which it doesn’t really have the revenue. So, that is why the debt stock has been growing.”
