External borrowings: Economist cautions federal government over N21.73 trillion debt

An economist, Prof Sheriffdeen Tella, on Monday, March 19, described the nation’s debt stock of N21.73 trillion as worrisome and urged the federal government to stop external borrowings.

Tella, a professor of Economics at the Olabisi Onabanjo University, Ago-Iwoye, Ogun, expressed his views in an interview with the News Agency of Nigeria (NAN) in Lagos.

Tella stated that the current size of the country’s external debt was worrisome.

It was reported that then Debt Management Office (DMO), on March 14, said that Nigeria’s external debt had risen to 18.91 billion dollars (N5.79 trillion) as at December 31, 2017. The DMO said that domestic debt also rose to N15.94 trillion, bringing the total debt stock to N21.725 trillion (70.92 billion dollars).

According to the economist, the total external debt of 18.91 billion dollars is very high compared to the current Gross Domestic Product (GDP). He said that the current GDP growth rate was largely due to higher crude oil price than increased output in agriculture.

Tella said that there was no rationale for government to borrow in dollars to offset domestic debts, stressing that part of the earnings from oil should be monetised to offset such debt.

According to him, government is borrowing as if the country is not earning foreign exchange which can be used to meet some of the external needs.

“What is the pride in accumulating external debt when you are at the same time building external reserve? The ratio of debt service to the annual budget continues to rise, thereby depriving the nation of funds that should go into project execution and general economic development," Tella said.

He said that the earlier the National Assembly stopped approving borrowing, the better it would be for the country.

Meanwhile the National Bureau of Statistics (NBS) said on Tuesday, September 19, that as at June 30, 2017, Nigeria's debt stocks stood at about $15.1 billion and N14.1 trillion respectively.

According to the report, after proper review, it was shown that the total foreign debt profile of the federal and the 36 states governments and the Federal Capital Territory (FCT) shows a continuous rise since the coming of the Buhari administration.