*Debt can destroy Africa, ANEEJ warns
Nigeria has said that its debt profile is still within sustainable limits, hence it’s not under stress.
According to the Debt Management Office, the country’s debt is yet to reach the threshold set by the International Monetary Fund and the World Bank.
This is despite the negative toll the debt profile is having on the economy.
Financial Street learnt that ECOWAS set debt limit for West African countries at 70 per cent of the nation’s Gross Domestic Product, and Nigeria is at 21per cent; for external debt, DMO has 40 per cent benchmark, and the country is still at eight per cent.
Nigeria’s external debt as at December 2020 was $33.8n (about N12.7tn) of which the Federal Goverment owed $28.5bn, while the states owed $4.7bn. The domestic debt is $53.04bn. While the Federal Government’s debt was put at $42.1bn, the states owed $10.9bn, puting the total debt at $86bn.
The representative of the DMO Director-General, Monday Usiade, disclosed during a presentation on Nigeria’s Local and Foreign Debt Management at the West Africa’s debt advocacy and training session in Abuja organised by the the African Network on Environment and Economic Justice, in partnership with African Forum And Network on Debt and Development.
He said they had provided the debt sustainability analysis using the Breton Woods institutions’ template, which they use to analyse the nations’ debt yearly and advise government on borrowing, adding that looking at the size Nigeria’s economy, which is relatively large compared to other smaller countries, the debt to GDP ratio as at 2019 stood at 19 per cent, which is relatively small.
According to him, the debt only increased by 1.6 per cent in 2020, and that the country can still generate the needed revenue to service the debt.
Usiade said though the World Bank and he IMF were advising Nigeria to go up to 55 per cent, the country said it would always ensure responsible borrowing.
He said, “Looking at all the indicators, Nigeria is not under any debt distress.”
The Executive Director of ANEEJ, David Ugolor, remarked that if the debt issue by African countries were not properly managed, it had the potential of quietly sending thousands to their early graves and throwing millions of Africans into poverty, as economies of some West African countries were already showing early signs.
He pointed out that while IMF debt sustainability analysis as of February 2021 showed that the majority of countries in West Africa had remained in moderate debt distress, a further analysis indicated that debt accumulation prior to the outbreak of the Coronavirus Disease outpaced the ability of growth performance to support debt servicing.
He lamented that of the 15 member states of ECOWAS, five were already faced with heavy debt burdens, including The Gambia, Ghana Guinea-Bissau and Sierra Leone.
