(3 minutes read)
· According to the Nigerian Debt Management Office (DMO), the country’s public debt (including that of federal, state governments and federal territories) as on December 31, 2020 was N32.915 trillion
· The increase in debts, DMO points out, is due to the
COVID-19 pandemic
· This had led to the government borrowing more, bucking the earlier trend of decline in borrowings
According to the Nigerian Debt Management Office (DMO), the country’s public debt (including that of federal, state governments and federal territories) as on December 31, 2020 was N32.915 trillion. The increase in debts, DMO points out, is due to the COVID-19 pandemic. This had led to the government borrowing more, bucking the earlier trend of decline in borrowings.
The statement issued by the DMO shows that the new borrowings to part finance budget deficits had declined steadily from N2.36 trillion in 2017 to N2.01 trillion in 2018, N1.61 trillion in 2019 and N1.59 Trillion in the first 2020 Appropriation Act. However, this trend was reversed by the onset of the pandemic. The new borrowing in the revised 2020 Appropriation Act was N4.20 trillion, way ahead that of the earlier years.
The statement also explains that Nigeria was not the only country, which had resorted to heavy government borrowing during the pandemic. Even developed countries increased their level of borrowing as a result of COVID-19. Apart from the New Domestic Borrowing of N2.3 trillion, the other new borrowings were concessional loans from the International Monetary Fund (USD3.34 Billion) and other multilateral and bilateral lenders.
The total public debt to Gross Domestic Product as on December 31, 2020 was 21.61 per cent. DMO maintains that it worked out well within the permissible limit of 40%. The statement also explained various steps being taken by the federal and state governments to shore up the revenue such as the Strategic Revenue Growth Initiatives and the Finance Act, 2020. It feels that these two measures would help shore up Government’s revenue and reduce the Debt Service to Revenue Ratio.
