Metro
Living in denial! Nigeria, neck deep in debt (See profile)
Finally, the reality is out: Nigeria is broke, seriously broke!
To say the country is sagging under the weight of its growing internal and external debt is indeed an understatement.
Truth is, across all tiers of government, the situation is terrible. The revelation about the parlous state of the economy, which government spin doctors refused to admit all this while, is finally out in the open.
Who else belled the cat, but the Minister of Finance and Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, who financial pundits, observed, appeared to have come down from her high horse, confirmed the rumour mill that the nation’s ship was sinking deeply into debt these past years.
“We have serious challenges. Things have been tough since the beginning of the year and they are likely to remain so till the end of the year,” she said.
With crude sales accounting for more than 80 percent of government revenue, Nigeria, Africa’s top economy and largest oil producer, has been hammered by the 50 per cent fall in prices.
Okonjo-Iweala said the federal government had a projected borrowing allowance for 2015 of N882 billion ($4.4 billion/4 billion euros).
But N473billion has already been used up to meet recurrent expenditures, including public worker salaries. “We have front-loaded the borrowing programme to manage the cash crunch in the economy,” the minister told reporters.
Okonjo-Iweala, who continually stressed that this year would be particularly difficult for Nigeria, economically, said the hardship occasioned by the drop in crude prices, should serve as an incentive and a wake-up call to diversify the economy, rather than a challenge.
While Okonjo-Iweala said the severity of Nigeria’s cash crunch requires daily management, the problem will almost certainly be off her desk in less than a month. President-elect Muhammadu Buhari will be sworn in on May 29 and is not expected to retain any of the key ministers appointed by outgoing President Goodluck Jonathan.
Like the Federal Government, the states are also weary of the gloom that stares them in the face. The APC governors had last Tuesday met with President-elect, Major-General Muhammadu Buhari (retd) at the Defence House, Abuja, to express their displeasure over the parlous state of the economy.
The governors cried out that most state governments had gone bankrupt and, therefore, cannot pay workers’ salaries.
According to them, it was obvious that they were going to inherit huge debts which may delay speedy progress in their respective states. They were, however, silent on APC states like Lagos, Edo and Osun, which are currently the most indebted in the country.
Addressing journalists after their indoor meeting with Buhari, chairman of APC governors, Chief Rochas Okorocha of Imo State, said the outgoing government had ruined the economy.
According to him, the fact that the federal government has not paid April salaries was an indication that the economy was not healthy.
Okorocha said: “As it stands, most states of the federation have not been able to pay salaries and even the federal government has not paid April salary and that is very worrisome.
“By May and June, the salary will be in cumulative of three months. With the huge expectation from Nigerians and people who have voted us into power, we wonder. We are hoping that the president-elect will do whatever is humanly possible to bring about a bailout not only in the states but the federal government, at least for people to get their salaries and turn around the economy.”
Debt profile across the states
But what is the degree of Nigeria’s debt really? The devil as they say is in the detail.
Investigation by Ripples revealed that states across the federation are experiencing cash crunch crisis.
At the last count, the debt burden of the 36 states of the federation as well as the Federal Capital Territory is now at a whopping N12.06tn.
From available records obtained from the website of the Debt Management Office, Ripples discovered that the country’s public debt rose from N10.16tn as of March 31, 2014 to N12.06tn as of March 31, 2015.
Paired into specifics, the report revealed that the country’s indebtedness rose by N1.9tn within a 12-month period, with the public debt put at 18.7 per cent.
A cursory look at the total public debt showed that much of it (N8.51tn as of March 31, 2015) was owed domestic creditors by the federal government.
The domestic debt of the government rose over a 12-month period, by N1.33tn from the total N7.18tn recorded on March 31, 2014, which is an increase of 18.52 per cent.
The domestic debt of the states rose from N1.55tn to N1.69tn within the same period.
Besides, the external debts of both the federal and state governments rose marginally from $9.17bn on March 31, 2014 to $9.46bn as of March 31, 2015.
A breakdown of the domestic debt profile of the Federal Government by instrument showed that FGN Bonds accounted for N5.37tn or 63.13 per cent of the total.
The Nigerian Treasury Bills, on the other hand, accounted for N2.87tn or 33.68 per cent of the federal government’s total domestic debt profile.
Nigeria typically sets its crude oil benchmark price between 75 and 80 dollars, and is supposed to deposit excess revenue in a savings account.
But even when crude was selling above $100 last year, Jonathan’s administration struggled to build savings. Critics say the excess crude account has been repeatedly raided by powerful political actors, a development that has left the country’s purse empty.
See below a table of the debt profile of states and the Federal governments
– Ali Smart
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Don Lucassi
May 12, 2015 at 7:48 am
“Finally, the reality is out: Nigeria is broke, seriously broke!” After the lies and denials, I don tire for this woman. I keep saying it that she is not serious. No one has disappointed me more in the GEJ administration, than she has.
Don Lucassi
May 12, 2015 at 7:54 am
Who borrows money to cover recurrent expenditures? Oh I forgot, Nigeria does.
de don
May 12, 2015 at 9:36 am
When GEJ allowed corruption to be much why we no go broke na shit dey there head..
liquasa
May 12, 2015 at 9:38 am
I said it before now its happening..
Apachee zooma
May 12, 2015 at 10:19 am
Let’s not throw the baby away with the bath water! Is it about FG alone? What about the states? How much rigour went into economic planning? My position…before we crucify anyone, let’s know what the figures are saying against our assets at various levels. Nothing wrong with borrowing if measured properly against value of assets.
billion$
May 12, 2015 at 11:49 am
oh my!!zoomaN it shouldnt even be measured against our assets,we should be lending to nations and not borrowing…besides where are the so called assests?they have all been liquidated,there is nothing else biko.
billion$
May 12, 2015 at 11:43 am
why?why?why? where did we go wrong? why is everything falling apart?
Ngozi i thought you had integrity,smh!!
Biodun
May 13, 2015 at 10:41 am
Everything is not falling apart, and there’s no questioning madam Ngozi’s integrity. Her integrity and professionalism have been our saving grace. Otherwise, the greedy politicians would have wrecked our economy
billion$
May 13, 2015 at 10:55 am
saving grace my foot.. they are all in it together…awon ole jati jati!
hello bae!!!
May 12, 2015 at 1:56 pm
so its all over abi?nothing for them to steal again?
Gracious Store
May 12, 2015 at 5:33 pm
It is not a surprise that Nigeria is in dept and Goodluck’s regime is not the first time States have been unable to pay their workers, it is simply the constant recurrence in the country. Rather than the in-coming president and APC members lamenting over the state of Nigerian economy, it is an incentive for them to start early and devise the best ways to diversify the economy, which is one of the campaign promises of the in-coming president. There is no country who relies on only one source of income that hopes of a robust economy.
The only solution for the growth and stability of Nigeria economy is diversification of sources of income and of course imprisonment of all who have been found guilty of looting either the Federal of state treasuries . Of course every looted penny should be confiscated and returned to the appropriate treasuries
me
May 12, 2015 at 6:37 pm
History will remember this Administration for it reckless spending, still Nothing to show for it.
Apachee zooma
May 12, 2015 at 6:59 pm
The assets wey I mean no be PHCN, Nigerian Airways, or the likes. We are talking economics, not turenchi. It would be improbable that an audit conducted on Nigeria’s finances would reveal that we are bankrupt. You can be broke and still be credit worthy, you get? Integrity na different matter, me I no support stealing of any kind. Give credit where necessary bros.
Apachee zooma
May 12, 2015 at 8:46 pm
Please, can somebody look up US debt stock against China. No excuses for grievous maladministration and ineptitude. But should we slaughter this internationally acclaimed economist without celebrating her where necessary?
AdeyeyeAdedotun
May 13, 2015 at 2:28 am
Observers easily comment on how PDP govt in 16 years has ruined Nigeria’s economy. Lumping the 16 years of 2 different regimes (though of the same Political Party) together would be unfair, especially as the drivers in the two halves were different individuals. How much was our debt in 1999, how much was it in 2007 and where are we today, 2015?
Biodun
May 13, 2015 at 11:03 am
Nobody is living in denial of Nigeria’s debts. Yes, we have debts to pay but the situation is not as grievous as the alarmists would have us believe.
naughtynot
May 13, 2015 at 5:05 pm
Nigeria! This Nation must survive. Aunty Ngo, una welldone oo!
Biodun
May 14, 2015 at 10:51 am
Just like your pseudonym says, you must be naughty indeed. What are you insinuating? Aunty Ngo deserves our commendation rather than your veiled criticism.
Aminat
May 14, 2015 at 1:00 pm
And have you seen how much other countries owe? Before you write things like this, did you do your due diligence and research the debt portfolio of other nations? What expertise do you have on world economics? Abeg go and rest jare. Madam Iweala should be celebrated for helping us wade through the crisis so far. Gbam!
Shaggy
May 14, 2015 at 2:08 pm
I think Madam Iweala should just ignore these guys who are ranting and focus on work. As it always happens in her case, her good deeds will speak for her.
nwafor shadrach
July 23, 2015 at 2:26 am
all dis comments on deplorable condition of nigeria economy,d total blamish shld go to jonthan himself,because pdp acronym iz jst to share de money…desame thesame corruption n immunity cover d state governors to sideline their state economy…jonathan approves all d money spent and also seek approval of a loan frm worw bank.akonjo iwualla roles is jst to account for administrative tenor.mind.