Why Nigeria Needs No Debt Relief – Finance Minister

Why Nigeria Needs No Debt Relief – Finance Minister

Zainab Ahmed, Minister of Finance, Budget, and National Planning, has stated that Nigeria does not need to seek debt cancellation or restructuring because its debt position is within acceptable limits.

She also stated that Nigeria was not insolvent and that it could meet its debt obligations in the short, medium, and long term.

She spoke in Abuja on Thursday while presenting her ministry’s seven-year scorecard.

When asked if Nigeria should consider debt restructuring or cancellation, she stated that it was not an option.

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“We don’t have any need to restructure, our debt management strategy is being followed closely.  We provide in our budgets, provision for debt service and it’s taken as first line charge. We haven’t defaulted on any loan – local and external.

“We have projections of meeting our debts obligation in the short and medium terms.

“We’re comfortable in terms of our ability to pay our debts. So, we’re not going for any debt relief and we’re not going for any debt restructuring,” the minister said.  President Muhammadu Buhari had at the United Nations (UN) General Assembly in September, sought debt cancellation for developing countries, which he said, were faced with a “debilitating chokehold on their fiscal space.”

Buhari had said, “There is a need to address the burden of unsustainable external debt by a global commitment to the expansion and extension of the Debt Service Suspension Initiative to countries facing fiscal and liquidity challenges as well as outright cancellation for countries facing the most severe challenges”.

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According to the Debt Management Office (DMO), Nigeria’s total public debt stock was N42.84 trillion ($103.31 billion) as of June 30. The finance minister also stated yesterday that, while the federal government was not earning enough, its revenue position was improving, with oil theft decreasing.

“We’ve also witnessed a significant increase in non-oil revenue. Unfortunately, oil revenue has underperformed because of criminality but recently, the NNPC has reported that oil theft has been curtailed and we are beginning to see a pick-up in production levels. This means more revenue will come to the government,” she said.

She stated that the NNPC Ltd was now producing about 1.3 million barrels per day, up from about 800,000 previously.

However, Ahmed emphasized that the FG’s earnings were insufficient to cover its needs, hence the borrowings.

She stated that the borrowings were practical, long-term, and guided by a debt management strategy.

“There is a debt management board chaired by the vice president. The debt management strategies are being followed judiciously. At 33 per cent to GDP, we’re still the lowest within countries that are our comparatives” she stated.

“But again, I still say we have a revenue problem in spite of the increase in non-oil revenue because our performance is eight to nine per cent of GDP, the revenue is not enough. We are a population of about 200 million who deserve better service.” On the support of developments in the states, the minister said: “A total of N5.03 trillion plus an additional $3.4 billion has been released to states by the federal government over the life of this administration.

“The support covers the 13% derivation refund to oil-producing states, a refund for the construction of federal roads, ecological support, support from the development of the Natural Resources Fund, Paris Club refunds, support from the Stabilisation Fund, COVID intervention, among others.”

She also stated that the government was assessing its revenue-generating enterprises in order to attract more investments and revenues.

“Restructuring of the Ministry of Finance Incorporated (MOFI), which manages GOEs and government-linked companies (GLCs) to drive value creation from different asset classes or investments of the FGN.

“MOFI’s current portfolio consists of 130 corporate entities valued at about N19 trillion.

She stated that the goal for the next ten years is to increase MOFI’s Assets Under Management (AUM) to around NGN 34 trillion while achieving a minimum annualised average return of 15% (about N5.1 trillion). Earlier, the Minister of Information and Culture, Lai Mohammed, stated that no administration has done better than the Buhari administration in providing financial assistance to states since the start of the current political dispensation in 1999.

He stated that when the administration took office in 2015, at least 27 states were unable to pay their employees’ salaries.

“Imagine what would have happened if Mr. President had not offered a helping hand, without discrimination, to the states. But for Mr. President, most of the states would have been plunged into serious socio-economic crisis, with dire consequences for the country,” he said.

Mohammed noted that the assistance to states came at a time when national resources were severely depleted and there were competing needs in many areas, including infrastructure, security, global pandemic, and others.”

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