FG, States owe $9.16bn foreign debt

The Federal and state governments owe a foreign debt of $9.16billion, fueling speculation that Nigeria may be returning to the pre-Paris Club debt-forgiven era.

However, the Coordinating Minister for the Economy and the Minister of Finance, Mrs Ngozi OkonjomIweala, has stated that there is no cause for alarm as the external debt is within the threshold of the maximum 25 per cent Debt to Gross Domestic Product ratio. The Director-General, Debt Management Office (DMO), Dr Abraham Nwankwo, made the disclosure while giving a presentation of the nation's debt profile to the Committee on Public Finance at the on-going National Conference in Abuja.

In his presentation, he put the nation's external debt at 9.16 billion dollars, with the states having approximately 2.8 billion dollars. According to him, states account for 18 per cent of domestic debts while the Federal Government accounts for 82 per cent.

Nwankwo said the laws guiding borrowing stipulated that no state could borrow except with the expressed permission of the National Assembly and that any state that did not conform with the stipulation would be seen as committing an illegality.

He said states also required the approval of the Finance Minister to borrow from the capital market, adding that for states to borrow in whatever form, they must obtain the approval of their respective Houses of Assembly.

Dr Nwankwo explained that it was the responsibility of SEC to ensure that the money borrowed from the capital market by the states was judiciously utilised.

He said in 2007, the DMO took a decision to help states establish debt management departments to reconstruct their debt profile, particularly domestic debts which he put at N8.7 trillion, excluding debts owed local contractors.

He disclosed further that contractor's debt was not included because it was a structured debt and usually provided for in the budget. The Committee Chairman, Senator Adamu Aliero, expressed concern over the action of state governments which borrowed money indiscriminately from foreign sources without due process. He sought explanation from the DMO on why it was so.

The Director-General's response was that relevant agencies of government, saddled with the responsibility of tackling states that violated the laws regarding debt management and borrowing, should take appropriate action.

While Nigeria's cumulative debt at N10.1 trillion, about 10 per cent of the nation's GDP, Dr Nwankwo, insisted that the Nigeria had been consistent in servicing all its loans.

A member of the Committee, Colonel Bala Mande, expressed worries over the tripling of the nation's debt and wanted to know the relationships between the DMO and other relevant agencies like EFCC and ICPC.