Gilbert Ekugbe
The Institute of Directors (IoD) has expressed concerns over Nigeria’s rising public debt combined with its high spending needs, noting that the difficulty in raising extra tax revenue is putting the country in a difficult fiscal policy trilemma.
The president and Chairman of Council, IoD, Mrs. Ije Jidenma, at its 38th Annual General Meeting (AGM), said according to the Debt Management Office (DMO) in its quarterly data series on Nigeria’s public debt put Nigeria’s domestic debt at N19.2 trillion equivalents to 11.1 per cent of 2021 Gross Domestic Product (GDP).
She added that the increase according to the report can be attributed to new borrowings by both the Federal and State governments.
“The DMO explained that the increase was largely accounted for by the $4 billion Eurobond issued by the government in September 2021. For the Federal Government, the 2021 Appropriation and Supplementary Acts included total new borrowings of N5.48 trillion to part- finance the deficits,” she said.
In her words: “The size of the federal government’s borrowings in the year, estimated at N5.1trn (excluding the supplementary budget), including the $1.25trn Eurobond issue, is likely to exert upward pressure on market yields in the second half of 2022.”
She noted that Nigeria recorded a sum of $6.7 billion as capital inflows from foreign countries in 2021, stressing that the value represents a drop of 31 per cent relative to the $9.7 billion received in the previous year.
“This represents the lowest inflows recorded since 2016. If this trend of lower foreign inflows continues, it would add to the current pressure on the nation’s external reserve, a situation that could further weaken the exchange rate if it lingers. Hence, the Nigerian government needs to improve Nigeria’s export capacity to earn foreign exchange to meet our import bill obligations and bolster our foreign reserve level,” she advised.
