The Director-General, Debt Management Office, Patience Oniha, said that there is nothing wrong with borrowing to fund the Nation’s budget deficit.
She stated this while speaking to journalists on Wednesday in Abuja concerning the Nation’s increasing debt profile which stood at N28.63 trillion as of March 31, 2020.
Rather, Oniha said instead of complaining about the nation’s debt profile, Nigerians should be more concerned about how the loans are being utilized.
She added that borrowing is not restricted to Nigeria as many big countries also borrow to keep their markets open.
She retorted, “Why do we borrow? Every year, you see us prepare a budget. This is not only in Nigeria, countries have budgets. We also prepare the Medium-Term Expenditure Framework; the budget is a part of that.
“In the budget, you see all the lines: the personnel cost, capital expenditure and you will see new borrowing. You will see domestic and external, why do we have those?
“This is so because there is a deficit. The meaning of this is that our revenues are less than our expenditure. One way you balance it is through the sale of assets. You will remember the days that BPE was selling a number of our assets and we were getting money.
“The other way out is through new borrowing. That is always in the budget, so it starts from there.
“I always say that when we talk about the growth in debt stocks, we forget the origin. When you have a deficit in the budget and you borrow, it adds on. So, it goes like that incrementally unless the ones that are matured and we paid.
“So, when you see a deficit in the budget, that is where you should start. We borrow to finance the deficit in the budget.”
Oniha said even when the nation was at its best moments with oil prices hovering between $100 and $110 per barrel and with no disruption in production, the country still borrowed not to talk of now that revenues are lesser.
She noted that borrowing can never be a unilateral decision as the law requires that the approval process should go through the Federal Executive Council and the National Assembly.
“We cannot borrow without those two levels of approvals. That is the requirement of the DMO Act and the Fiscal Responsibility Act,” she explained.
Justifying the increase in the borrowing plan in the revised 2020 Budget, Oniha said that the COVID-19 pandemic brought with it additional expenses on the part of the government.
The DMO boss also said that when her office publishes the nation’s debts, they are not the loans accessed by the Federal Government alone.
She explained that although an average of 75 percent of the loans might be that of the Federal Government, the figure also includes the debts of states and the Federal Government “because it is one country and one Gross Domestic Product.”
Recall that the National Bureau of Statistics, NBS had in its Q1 2020 report put the total public debt as of March 31, 2020, at N28.63 trillion.
According to the NBS report, “Nigerian States and Federal Debt Stock data as of March 31, 2020, reflected that the country’s total public debt portfolio stood at N28.63 trillion.
“Further disaggregation of Nigeria’s total public debt showed that N9.99 trillion or 34.89 percent of the debt was external while N18.64 trillion or 65.11 percent of the debt was domestic.’’