BudgIT, civic tech organisation, has faulted the claims by the Vice President, Prof. Yemi Osinbajo, that the President Muhammadu Buhari-led administration inherited a debt of $63 billion and has only borrowed $10 billion since it took over office in 2015.
The organisation in a statement made available to THISDAY yesterday by its Human Resources Manager,Niyi Soleye, noted that the trending story was that the country borrowed only N3 trillion in three years since the debt stock rose by $10 billion.
It explained: “We opine that the current rise of $10 billion in public debt stock does not tell the full story. To say the least, this can be misleading. Argument explaining that the entire federation borrowed only N3 trillion in three years since the debt stock rose by $10 billion has been the trending narrative.
“However, it is important to deconstruct the federal government debt into external and domestic debt to get a full understanding for purposes of accountability,” it added.
According to the statement, the federal government debt stock totals the sum of external debt and domestic debt.
It further stated that the Debt Management Office’s figures showed that federal government’s external debt alone grew from $7.34 billion in June 2015 to $17.83 billion in June 2018, which was an additional $10.49 billion in three years.
“Domestic debt of FG as at June 2015 was N8.39 trillion while it stood at N12.15 trillion as at June 2018. That’s another increase of N3.76 trillion in three years.
“At an exchange rate of N305/$, that’s $12 billion. This means the total increase in external and domestic debt is $22 billion.
“It is public knowledge that the naira was devalued in recent years, and this singular act shrunk and expanded a lot of indexes. Those who put forward $10 billion are comparing the wrong values without adding the important information that exchange rates for the times are different.
“From our research, we have observed that this administration (FG alone) borrowed $22 billion in three years, but due to naira devaluation gains but total public debt stock (for the entire Federation) increased by $10 billion, which makes current claims true.
“However, it is important to state that it is true that public debt is now $73 billion, grew by $10 billion, because federal government domestic debt in dollar terms was $42.63 billion in June 2015 and $39.75 billion as at June 2018.
“This does not mean that the federal government borrowed less domestic debt in three years. It only goes to show that the domestic debt of FGN grew from N8.39 trillion to N12.15 trillion, from 2015 to 2018 respectively,” it explained.
According to BudgIT, devaluing the exchange rate from N196.95/$ to N305.7/$ made the domestic debt in 2018 relatively smaller in dollar terms.
“For clearer understanding, let’s use this analogy. It is like borrowing N1,000 in 2015 which is $5 at N200/$. If you borrow additional N500 at a new exchange rate of N300/$, you now owe N1,500 but you still owe an equivalent of $5.
“It can then clearly be shown that the naira equivalent of the total debt has risen from N12.1 trillion to N22.4 trillion, a growth of N10.3 trillion.
BudgIT stated that acquiring debt is not bad if put to judicious and profitable use for the citizenry.