The Federal Government spent a total of N4.3tn to service the country’s debt obligations to local and foreign debtors between January 2015 and September 2017, figures obtained from the Budget Office on Friday showed.
The figures are computed from the quarterly budget implementation report prepared by the Budget Office.
An analysis of the report by our correspondent showed that the sum of N1.06tn was used to service debt in 2015.
The amount rose to N1.31tn in 2016 before hitting N1.54tn in 2017.
A breakdown of the N1.06tn debt service amount for 2015 showed that the sum of N302.1bn was spent in the first quarter made up of N287.5bn for domestic debt and N14.51bn for foreign debt.
In the second quarter of 2015, the report said out of the N239.7bn debt service figure, N218.49bn was spent on domestic debt while N21.2bn went for foreign debt service.
For the 2015 third and fourth quarters, the budget implementation report said that the sums of N305.33bn and N214.24bn were spent, respectively.
Giving a breakdown for 2016, the report said N364.81bn was spent in the first quarter; N233.82bn in the second quarter; while the third and fourth quarters had N468.88bn and N245.95bn, respectively.
For 2017, the report said N624.15bn was used to service the nation’s debt in the first quarter while the second and the third quarters had N303.59bn and N613.21bn, respectively.
Further breakdown of the N1.54tn debt service figure for 2017 showed that domestic debt servicing with a total of N1.48tn accounted for a huge chunk of the debt service obligations. The N1.48tn is about 96.1 per cent of the entire amount spent by the nation on servicing its debt.
Foreign debt servicing obligation followed with the sum of N55.8bn or 3.9 per cent of the entire debt service amount.
The report read in part, “Total debt service in the third quarter of 2017 stood at N613.21bn, signifying a N197.24bn or 47.42 per cent increase above the N415.97bn projected for the quarter.
“A quarterly projection of N372bn was made for domestic debt services but the sum of N613.21bn was actually spent in the third quarter of 2017. This portrayed an increase of N241.21bn or 64.84 per cent above the quarterly estimate.
“The sum of N43.97bn was proposed for the servicing of external debt in the quarter under review. External debt service payment was however not made during the review period.”
Finance and economic experts who spoke on the development on Friday cautioned the Federal Government against further borrowing.
They stated that the country’s debt profile of N19tn was becoming unsustainable as it might be difficult to service it owing to revenue challenges facing the country.
They advised that rather than relying on borrowing to finance its activities, the Federal Government should adopt other sources of funding the infrastructure needs of the country such as concession, privatisation and Public Private Partnership arrangement.
Those that spoke to our correspondent in separate telephone interviews are the President, Institute of Fiscal Studies of Nigeria, Mr. Godwin Ighedosa; and the Director-General, Abuja Chamber of Commerce and Industry, Mr. Chijioke Ekechukwu.
Ekechukwu said, “It is expected that the debt profile of the country would rise considering the fact that we have a deficit budget and even the deficit side of the budget was not met in the last budget year.
“With the recession of last year, government would need to continue borrowing to meet the increased size of the deficit. Of course, the borrowing portends danger for the economy because our debt profile is rising and we do not know when we are going to scale it down.
In his comment, Ighedosa said while it was not bad to borrow, there was a need for a reduction in government expenditure.
He said, “We have a high fiscal deficit, which can only be funded through borrowing. When you borrow for investment, it improves the position on your balance sheet and when you borrow for consumption, it can cause problems for the economy as it will affect the level of confidence in the economy from investors because they will assume we can’t manage our economy.
“We already have a debt overhang, and as it is, we are building that up and so there is a need to reduce the rate of borrowing.”
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