Islamic Bank Cautions Nigeria As Total Debts Stand At $60bn
BEVERLY HILLS, March 01, (THEWILL) – Chairman, Senate Committee on Foreign and Local Debts, Shehu Sani (APC, Kaduna Central), has revealed that Nigeria’s total debts stands at $60 billion.
Sani made the revelation while hosting the resident representative of the Islamic Development Bank (IDB) in Nigeria, Abdallah Kiliaki, adding that available records show that $10.6 billion, of the total $60 billion debt, w s from foreign loans.
Kiliaki in his remarks observed that although Nigeria’s debts GDP ratio was low at 17 percent, resources being used to pay the debts were enormous going by percentages taken on yearly basis adding that Nigeria spent 80 percent of her revenue on debt servicing.
According to Kiliaki, for Nigeria not to get herself suffocated by such huge debt servicing with limited resources, there is the urgent need for her to expand the scope of its resources through diversification of her economy into other critical areas, especially agriculture, on the template of value addiction from production to processing and to export, which would earn her required foreign incomes.
“My visit is very crucial because we need to look at the debt profile of a country before we give it new contractual sort of financing. We also work closely with the International Monetary Fund and the World Bank to ensure that our financing has the required threshold of grant financing which is normally 35 percent but at the same time there were financing that is not a burden to a country to the extent that the debt may not be sustainable,” he said.
“When talking about unsustainable debt, it means that a country or a borrower is unable to pay. So we take very serious note of that. When you look at the debt GDP ratio of Nigeria is very low, it is very low. It is 17 percent compared to Italy and other countries, which is about 150 percent, while that of the United States is about 100 percent.
“But there is a caveat, it is true that debt to GDP ratio is low but when you look at the amount, the revenue, to debt servicing ratio, the amount of money that the government is collecting, the revenue of the government vis a vis the ratio to the total debt, I think Nigeria pays about 75 to 80 percent of its revenue to service debt, so this is very high compared to other countries where they use just 10 percent.
“In a nutshell, as clearly shown by available financial records, Nigeria still has considerable leverage of taking loans from multilateral financial institutions for development or investments purposes going by her very encouraging low ratio of debts servicing to GDP, but the factor of dwindling revenues being used to service the debts must be urgently looked into, by way of possible expansion.”
In his response, Sani specifically told IDB through its representative to be practically involved in the country’s effort at diversification of her economy and not just presenting her a guided loan offer promising that his committee would monitor every cent, every dollar and even kobo any government in Nigeria borrows.
“Borrowing should simply be a last option for any serious minded government and not just first option of way out of problems at hand because we don’t need to overburden our next generations for repayment of needless loans taking before their time.”
Story by David Oputah