BUSINESS FG spent N4.3tn to service debt in three years — Budget office

Posted By Adoga Michael Oyi


Director-General, Budget Office of the Federation, Ben Akabueze
Ifeanyi Onuba
The Federal Government spent a total of N4 . 3 tn to service the country ’ s debt obligations to local and foreign debtors between January 2015 and September 2017 , figures obtained from the Budget Office on Friday showed .
The figures are computed from the quarterly budget implementation report prepared by the Budget Office .
An analysis of the report by our correspondent showed that the sum of N1 . 06 tn was used to service debt in 2015 .
The amount rose to N1 . 31 tn in 2016 before hitting N1 . 54tn in 2017 .
A breakdown of the N1 . 06 tn debt service amount for 2015 showed that the sum of N302. 1 bn was spent in the first quarter made up of N287. 5 bn for domestic debt and N14. 51 bn for foreign debt .
In the second quarter of 2015 , the report said out of the N239 . 7 bn debt service figure, N218. 49bn was spent on domestic debt while N21. 2 bn went for foreign debt service.
For the 2015 third and fourth quarters , the budget implementation report said that the sums of N305 . 33 bn and N214 . 24 bn were spent , respectively .
Giving a breakdown for 2016 , the report said N364 . 81 bn was spent in the first quarter ; N233 . 82 bn in the second quarter ; while the third and fourth quarters had N468. 88bn and N245 . 95 bn, respectively .
For 2017 , the report said N624 . 15 bn was used to service the nation ’ s debt in the first quarter while the second and the third quarters had N303 . 59 bn and N613 . 21bn, respectively .
Further breakdown of the N1 . 54tn debt service figure for 2017 showed that domestic debt servicing with a total of N1 . 48 tn accounted for a huge chunk of the debt service obligations . The N1 . 48 tn is about 96 . 1 per cent of the entire amount spent by the nation on servicing its debt .
Foreign debt servicing obligation followed with the sum of N55 . 8bn or 3 . 9 per cent of the entire debt service amount .
The report read in part , “Total debt service in the third quarter of 2017 stood at N613 . 21bn, signifying a N197 . 24 bn or 47. 42 per cent increase above the N415 . 97 bn projected for the quarter .
“A quarterly projection of N372 bn was made for domestic debt services but the sum of N613 . 21bn was actually spent in the third quarter of 2017 . This portrayed an increase of N241 . 21bn or 64. 84 per cent above the quarterly estimate .
“The sum of N43. 97 bn was proposed for the servicing of external debt in the quarter under review . External debt service payment was however not made during the review period . ”
Finance and economic experts who spoke on the development on Friday cautioned the Federal Government against further borrowing .
They stated that the country ’ s debt profile of N19 tn was becoming unsustainable as it might be difficult to service it owing to revenue challenges facing the country .
They advised that rather than relying on borrowing to finance its activities , the Federal Government should adopt other sources of funding the infrastructure needs of the country such as concession , privatisation and Public Private Partnership arrangement .
Those that spoke to our correspondent in separate telephone interviews are the President , Institute of Fiscal Studies of Nigeria , Mr . Godwin Ighedosa ; and the Director - General, Abuja Chamber of Commerce and Industry , Mr . Chijioke Ekechukwu .
Ekechukwu said , “It is expected that the debt profile of the country would rise considering the fact that we have a deficit budget and even the deficit side of the budget was not met in the last budget year .
“With the recession of last year , government would need to continue borrowing to meet the increased size of the deficit . Of course , the borrowing portends danger for the economy because our debt profile is rising and we do not know when we are going to scale it down .
In his comment, Ighedosa said while it was not bad to borrow, there was a need for a reduction in government expenditure .
He said , “We have a high fiscal deficit , which can only be funded through borrowing . When you borrow for investment, it improves the position on your balance sheet and when you borrow for consumption , it can cause problems for the economy as it will affect the level of confidence in the economy from investors because they will assume we can’ t manage our economy .
“We already have a debt overhang , and as it is , we are building that up and so there is a need to reduce the rate of borrowing . ”