- Atiku's recent comments on Nigeria's debt profile has attracted the attention of the federal government
- A statement by the minister of information, Alhaji Lai Mohammed, says Atiku's statement is anchored on a false premise
- Atiku had on Tuesday, June 16, warned that Nigeria is in dire financial crisis due to the debt profile of the nation
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The federal government has reacted to recent comments by former Vice President Alhaji Atiku Abubakar on Nigeria's debt profile.
A statement by the minister of information, Alhaji Lai Mohammed, says the comments of Abubakar is “nothing but scaremongering anchored on a false premise.”
Atiku had in an article he posted on Linkedin on Tuesday, June 16, warned that Nigeria is in dire financial crisis due to the debt profile of the nation.
“I warn that Nigeria is facing a crisis, and we cannot continue to keep up appearances by taking out more loans to prop up our economy. That will amount not just to robbing Peter to pay Paul, but to robbing our children to pay for our greed!” he wrote in the widely read article.
Mohammed, however, said the figure of Nigeria’s debt to revenue ratio of 99% in the first quarter of 2020, quoted by Atiku is not in the Medium-Term Expenditure Framework and Fiscal Strategy Paper, where he claimed he got it from.
“We are also not able to ascertain the source of the first quarter figures of N943.12 billion for debt servicing and N950.56 billion for retained revenue, which he also quoted,” he added.
The minister said the debt service provisions in the annual budgets include principal repayments, interest payments and all other applicable charges.
“Therefore, the statement that debt servicing does not equate to debt repayment is not only wrong but ill-informed,” he stated.
He said since Nigeria’s debt service is expressly provided in the annual budgets and the debt service payments are made as and when due, the issue of creditors foreclosing on Nigeria, as strangely predicted by the former vice president, does not arise.
“One of the reasons why debt service to revenue is high is because revenue generation in Nigeria has been low, with over-dependence on the oil sector. This is corroborated by the fact that the ratio of Nigeria’s tax revenue to GDP is one of the lowest in the world at about 6%,” the minister said.
Despite Mohammed's comments, an overall picture of Nigeria's indebtedness shows a huge and depressing magnitude, structure and evolution of the country's debt.
Nigeria currently spends about one-third of its budget, three times its sectoral budget for education and nine times its health budget on servicing outstanding debts.
Despite the debt crisis, the government is still neck-deep in borrowing and it worries a lot of Nigerians.
Recently, the board of directors of the African Development Bank (AfDB) approved a $288.5million loan to help Nigeria tackle the COVID-19 pandemic and mitigate its impact on people and businesses.
The loan is expected to bolster the federal government’s plans to improve surveillance and response to COVID-19 emergencies, ease the impact on workers and businesses and strengthen the social protection system.
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Meanwhile, the Centre for Democracy and Development has released a report on its assessment of the Buhari's administration’s handling of the Nigerian economy in the last five years.
According to the report, the federal government borrowing has grown by more than 100 per cent since 2015.
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