N21.73trn Debt: Economist Cautions FG On External Borrowings
An economist, Prof. Sheriffdeen Tella, on Monday described the nation’s debt stock of N21.73 trillion as worrisome and urged the Federal Government to stop external borrowing. Tella, a professor of Economics at Olabisi Onabanjo University, Ago-Iwoye, Ogun, expressed his views in an interview with Newsmen in Lagos. He said that the current size of the country’s external debt was worrisome.
The 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 Dec. 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 apart from the delay in passing the 2018 budget and attendant delay in budget implementation which were affecting the speed of economic recovery, the huge sums spent on debt servicing also contributed to the slow economic recovery.
“This is the time to put a stop to these orgies of borrowing. How much of the dollar borrowed reach the shores of Nigeria? “A sizeable proportion is used for agency fees, facilitator fees, technical expertise, purchase of equipment, machinery, and other production inputs that are not produced locally, and payments are made for all these in foreign currency,” the don said.
Tella said that a number of research results had shown that external debts had negative impact on the development of the country. He said that the earlier the National Assembly stopped approving borrowing, the better it would be for the country. Tella said that there must be a threshold for external reserve and once the threshold is met, the rest should be for infrastructure development and other items we borrowed money to execute.