The Debt Management Office on Monday said the President Muhammadu Buhari administration met a debt stock of $63.81bn when it came into office in 2015.
The DMO was responding to a claim that Buhari inherited a debt stock of less than $7.0bn when he assumed office.
In a statement which was made available to our correspondent, the DMO said the claim was incorrect and not supported by readily available public debt data.
The DMO explained that the nominal increase in the public debt stock between June 30, 2015 ($63.81bn) and June 30, 2019 ($83.88bn) was about $20.0bn and not $77.0bn.
Making further clarifications, DMO explained that the public debt stock data comprised debts of the Federal Government, the 36 states and the Federal Capital Territory.
“It is therefore erroneous to attribute the growth in the public debt stock to borrowings by the FGN only,” the DMO said.
The office said that the increase in the country’s public debt stock was ‘well guided’ by the objectives of the Economic Recovery and Growth Plan and the Medium-Term Debt Management Strategy, 2016 – 2019.
“New borrowing was included as one of the strategies in the ERGP to be deployed in the near term, to stimulate economic growth and job creation,” the DMO said
It added that with the deployment of more funds into capital projects, the borrowings contributed to job creation and the recovery from economic recession in June 2017.
The DMO said the introduction of project-tied financing products (Sukuk and Green Bonds) in the second half of 2017 as part of the new borrowing also supported infrastructural development.
The office further said that Nigeria’s debt profile was sustainable.
It said, “By international benchmarks, Nigeria’s total public debt relative to the Gross Domestic Product is sustainable at 18.99 per cent of GDP as of June 30, 2019.”
The organisation noted that the government recognised that the ratio of its debt service to revenue was rather high.
“This is clearly evident from the tax to GDP Ratio of six per cent in 2018,” the DMO said, noting that the government had developed and was implementing a number of strategies to significantly enhance revenues.
According to the DMO, the strategies include the Strategic Revenue Growth Initiative introduced in January 2019 and the recent Finance Bill pending at the National Assembly.
“It is expected that these efforts would substantially enhance government’s revenue and thus, bring down the ratio of debt service to revenue,” the statement said.
DMO shed further light on the $22.718bn Medium-Term External Borrowing Plan, 2016 – 2018 (outstanding from the $29.96bn previously submitted), for which the government is seeking the approval of the National Assembly.
The loans, according to DMO, are meant to finance critical infrastructure, and will be mostly sourced from the multilateral and bilateral window.
The loans are also project-tied.
“The loans come with cheaper financing terms such as low interest rates, longer tenors and ample grace periods,” the DMO said.
The office added that the proposed External Borrowing Plan included the external funding needs of the states and the FCT.