By Nse Anthony-Uko
(Sundiata Post) – Three years into President Mohammadu Buhari’s administration and the Nigeria is saddled with a N21.725 trillion debt, about N12 trillion of which was borrowed under the his watch, data from the Debt Management Office (DMO) has shown.
According to the agency, Nigeria’s total Public Debt Stock as at December 31, 2017 stood at N21.725 trillion compared to N12.1 trillion as at June 30, 2015.
This is besides the $5.5 billion (N1.67 trillion) for which approval obtained from the National Assembly , out of which $2.5 billion was already being assessed.
This figure may likely increase as the official debt stock as at March 30, 2018 is yet to be released.
While the government has scored itself high in terms of performance in the last three years, the high debt profile has given it a low, which many fear would plunge the country into another debt trap.
The government has been widely criticised over the rising debt profile. Former Deputy Governor of the Central Bank of Nigeria (CBN), Professor Kingsley Moghalu, has kicked against the rising debt profile in the past three years he said has put the country “back into a debt trap that will weigh down the future generations of Nigeria.”
Also, one of the leading global rating agencies, Standard and Poor’s (S&P) recently cautioned the country about its rising debt profile, which has led to a rise in its debt service cost.
“General government debt-servicing costs as a percentage of revenues are high and have increased in recent years from below 10 per cent in 2014 to our projection of over 20 per cent on average, in 2018-2021.
“The central government alone has debt servicing costs of close to 50 per cent of revenues, which in our opinion, limits fiscal flexibility. The steep increase in the ratio is due to a combination of declining oil revenues since 2014 and higher borrowing costs in the domestic market,” the agency stated.
Nigeria’s external debt rose to $18.91 billion (N5.787 trillion) as at the end of December 2017, while domestic debt rose to N15.937 trillion, bringing the total debt stock of the country to N21.725 trillion ($70.92 billion).
The World Bank and the International Monetary Fund (IMF) also warned over the country’s rising debt.
The Buhari administration ended up borrowing so much as a result of the highly expansionary expenditure profiles, the highest in the history of Nigeria, operated by this government since inception.
Available data show that the country’s budget in 1999 was N299 billion; N702 billion in 2000; N894bn in 2001; N1.06trillion in 2002; N1.45trillion in 2003; N1.19trillion in 2004; N1.6trillion in 2005; N1.88trillion in 2006 and N2.39trillion in 2007.
By 2008 the budget increase to N2.74trillion; N3.05trillion in 2009; N4.4trillion in 2010; N4.7trillion in 2011; N4.9trillion in 2012; N4.99ttrillion in 2013 N4.96trillion in 2014 N4.4trillion in 2015 which was an election year.
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From 2016, the country’s budget jumped to N6.06 trillion then to N7.4 trillion in 2017 and then to a projection of N8.6 trillion sent to the National Assembly by President Buhari for 2018. The NASS subsequently raised it to N9.12 trillion, which, if signed would mean the government borrowing more and plunging the nation deeper into the debt trap.
However, the presidency scored President Buhari high in in performance during the last three years.
The presidency in a document last Friday scored Buhari’s government high on economy, infrastructure, and investment in people, among others.
On the economy, the country recovering from recession was used as basis. According to the National Bureau of Statistics (NBS), the economy has recovered from the slow-down and eventual recession, which started in 2014.
There has been improvement with stronger growth for three successive quarters. From contracting by 0.91 per cent in Q1 2017, the economy has grown by 0.72 per cent in Q2 2017, to 1.17 per cent in Q3 2017, and 2.11 per cent in Q4 2017.
The Q1 2018 GDP shows that the economy has recorded a GDP growth of 1.95 per cent, compared to a contraction of 0.91% in Q1 2017.
The growth is driven by Agriculture and Industry, which shows that finally, after more than 50 years of lip service, the Nigerian economy is on the road to diversification. The oil sector’s contribution to GDP is 9.61 per cent, while non-oil sector’s share is 90.39 per cent.
“One of the factors responsible for the positive performance of the economy in Q1 2018 was the spending of about N1.5 trillion on infrastructure projects in 2017.
“For the past 15 months, inflation has declined consistently from 18.72% to 12.48 per cent. The country is steadily on the road to single digit inflation rate.
“The first quarter of 2018 saw a continuous growth in total capital importation into the country, the fourth consecutive quarterly increase since Q2 2017. The total value of capital imported is $6,303.63 million, a 17.11% growth over the figure reported in the previous quarter.
“Foreign reserves stand at $47.79 billion, compared to $29.6 billion inherited in May 2015, after about six years boom in oil prices in the international market. The increase came at a time of modest oil prices, showing transparency and accountability by government.
“Nigeria’s Stock Market ended 2017 as one of the best-performing in the world, with returns of about 40 per cent.
“Tax revenue increased to N1.17 trillion, in Q1 2018, a 51% increase on the Q1 2017 figure.”
“Milled rice production has increased from 2.5MT to 4MT, and rice imports have dropped from 580,000MT in 2015 to 58,000MT in 2016. Millions of dollars have been saved.
“These are just little among the good things happening to the Nigerian economy. Only the wilfully blind will not see it, but it does not stop the good work, which continues, the presidency report had said.
However, if the country’s misery index is anything to go by, what this government termed as achievements have had any significant impact on the quality of lives of Nigerians.
Nigeria’s misery index rose to an all-time high of 47.7 per cent in 2017. The implications of a high ranking on the Misery Index are foreboding and clearly undesirable. Key, among these implications, is poor living standard of citizens. According to the United Nations Development Programme (UNDP), many Nigerians are living on less than US$1 a day, while poverty, hunger and inflation are making life miserable for them.
Misery index is a measure of economic well-being for a specified economy, computed by taking the sum of the unemployment rate and the inflation rate for a given period. An increasing index means a worsening economic climate for the economy, and vice versa. Inflation, unemployment and underemployment are three “evils” that no economy wants to tackle simultaneously. Sadly for Nigeria, the country has to deal with the three issues simultaneously. The three indicators, when summed up make up the broader definition of the misery index. This is because each of them has a negative impact on the wellbeing of the average person. So a misery index tries to capture how economically well off the citizens of a country are.
It is the sum of the unemployment, underemployment and inflation rates of at any particular period. A rise in the misery index, which could be triggered by a rise in any of the indicators, usually indicates that all is not well with the people. And sadly that has been the case with Nigeria in the last three years of this administration.