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Analysis of Nigeria's debt misleading, mischievous - Presidency

By The Citizen
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The Presidency on Thursday took a swipe on a media report which suggested that Nigeria's debt rose by $18bn in four years.

In a statement issued by the Special Adviser on Media to the Minister of Finance, Mr Paul Nwabuikwu,  said that the story was malicious and mischievous.

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The Daily Trust front page story of 11th May 2015 with the screaming headline 'Nigeria's debt rises by $18bn in 4 years' is mischievous, misleading and ignores publicly stated facts. It is totally out of context and skewed to misinform the public about the true state of the nation's debt profile and efforts made by the Federal Ministry of Finance under the current Minister to keep it low. It is the latest in the series of highly prejudiced and jaundiced reports by the Daily Trust which negate its motto as 'the newspaper you can trust'.

First, contrary to the negative impression created by the story, the period 2011 - 2014 has actually experienced the lowest growth in public debt due to the stringent measures put in place by the current Minister of Finance, Dr. Ngozi Okonjo-Iweala. Daily Trust failed to report that the public debt growth which was $24billion between 2004 - 2007 actually declined from $20.1billion for the period 2008 - 2010 to $18.3 billion for the period 2011 - 2014. It also failed to note that the 2011 - 2014 figure of $18.3 billion also includes the domestic debt of states which was not part of the earlier periods. This is a marked improvement that deserves strong commendation.

Second the simplistic recourse to accusing the current Ministry of Finance of 'poor planning and reliance on bonds at very high yields' by an unnamed Harvard trained economist is nothing but a cheap and transparent trick; it shows how inept and fragmented the analysis is.

One, it ignores the fact that interest rates are determined by market realities which include the going Monetary Policy Rate (MPR) and the inflation rate.

Two, a comparison of interest rates should be based on economies with similar characteristics and level of development. A 'Harvard trained economist' should know that it does not make any sense to compare Nigeria's interest rates with those of countries like the United States and United Kingdom.  The 13% interest rate is well within range of similar economies.

Daily Trust was economical with the truth by not acknowledging that the current debt profile was largely inherited by this government from the 53.7% general wage increase for all categories of public servants and political appointees in 2010. Another factor was counter-cyclical spending which was made to stimulate the economy in response to the global economic and financial crisis of 2008 - 2010 and prevent the country from receding into a recession. The impact of the spike in the domestic debt as a result of these two developments has remained a major factor in the high level of public domestic debt. This gap in the analysis of Daily Trust speaks volumes.

Also the claim that 'current debt profile is higher than it was before Nigeria secured debt relief from Paris Club' is also out of context and does not tell the whole story. In 2004, the external debt accounted for 77% of the overall debt profile, while the domestic debt was 23%. Today, this picture has reversed with the external debt position now at 18% while the domestic debt now constitutes 82% of the overall debt profile. The ability of the Ministry of Finance to keep the external debt low has reduced the Government's currency risk and helped greatly to better manage the naira.

The evident bias and selective use of public information portrays Daily Trust as a newspaper that is obviously out to misinform Nigerians and deploy distortions to cause disaffection against the outgoing government in furtherance of an agenda that is clearly not noble. This mindset and the kind of journalism that it has inspired in Daily Trust negate the fundamental principles that the newspaper is supposed to stand for.