President Bola Ahmed Tinubu has vowed not to plunge Nigeria into debt like his predecessor, Muhammadu Buhari, saying his government is committed to breaking the cycle of overreliance on borrowing for public spending.
Tinubu disclosed this in a statement by his spokesperson, Ajuri Ngelale, on Tuesday after Inaugurating the Presidential Committee on Fiscal Policy and Tax Reforms, chaired by Mr Taiwo Oyedele.
Former President Muhammadu Buhari left a huge debt profile of N80 trillion before handing over to Tinubu on May 29, 2023. The debts were the accumulation of loans borrowed since independence.
According to a report by Premium Times, Nigeria’s total public debt stock increased by about N2.38 trillion, or $6.593billion, as of June 30 last year. The Premium Times quoted the Debt Management Office (DMO) that the country’s total debt portfolio grew from about N28.628 trillion, or $79.303 billion, as of March 31 to over N31.009 trillion, or $85.897 billion, in the period under review.
Details of the increment, the DMO said, showed about $3.36 billion came from Budget Support Loan from the International Monetary Fund (IMF), while the balance are new domestic borrowings to finance the revised 2020 Appropriation Act. The new domestic borrowings include a N162.557 billion Sukuk and promissory notes issued to settle claims of exporters. The data showed the new debt figure comprised the debt stock of the federal government, the 36 state governments and the Federal Capital Territory.
The total external debt stands at about N11.363 trillion, or $31.477 billion, about 35.65 per cent of the overall outlay, against total domestic debt of about N19.945 trillion, or $54.419 billion, about 63.35 per cent of the total portfolio. Of the total external debt stock, the federal government accounted for N9.824 trillion, or $27.214 billion (about 31.6 per cent) of external debts; and N15.456 trillion, or $42.814 billion (about 49.84 per cent) of the domestic debts.
The states and the FCT owe about N1.539 trillion, or $4.263 billion (about 4.96 per cent) of the total external debt figure, and about N4.190 trillion, or $11.606 billion, (13.51 per cent) of the total domestic debt figure.
The DMO said additional promissory notes would be issued in the course of the year, along with new borrowings by state governments which would further increase the public debt stock.
Details of the debts stock, showed that the multilateral loans category consisted IMF $3.359 billion, while the World Bank Group and African Development Bank (AfDB) Group $16.36 billion. The three financial institutions accounted for about 52 per cent of the country’s total $31.477.14 billion debt stock.
The breakdown of the debt to World Bank’s affiliate institutions showed International Development Association (IDA) $10.05 billion; and the International Bank for Reconstruction and Development (IBRD) $409.51 million.
Similarly, the debt to African Development Bank stands at about $1.326 billion; Africa Growing Together Fund $0.14 million; African Development Fund $921.91 million; Arab Bank for Economic Development in Africa $5.88million; European Development Fund $52.52million; Islamic Development Bank $30.22million, and International Fund For Agricultural Development $201.68million.
On the bilateral level, Nigeria’s total debt to various institutions is about $3.949 billion, or 12.54 percent of the total debt stock.
They consist of those to Chinese financial institutions, including a Exim Bank of China $3.241billion; French institutions (Agence Francaise Development) $403.65milion; Japanese (Japan International Cooperation Agency) $76.69million; India (Exim Bank of India) $34.87million, and Germany (Kreditanstalt Fur Wiederaufbua) $192.71 million.
Commercial debt instrument debts totaling $11.16.35 billion, which account for about 35.48 per cent of the total debt, include Eurobonds $10,868.35bilion; Diaspora Bond $300million
Further details of the total N15.456 trillion Federal Government debts stock by instruments of as at the date under review showed that FGN Bonds of N11.241 trillion, or 72.75 per cent; Nigerian Treasury Bills N2.760trillion, or 17.86 per cent; Nigerian Treasury Bonds N100.988 bilion, or 0.65 per cent; FGN Savings Bond $12.984billion, or 0.08 per cent; FGN Sukuk N362.557billion, or 2.35 per cent, Green Bond N25.690billion, or 0.17 per cent, and Promissory Notes N951.740billion, or 6.16 per cent.
Details of the debts stock of the 36 states and the Federal Capital Territory stood at about N4.190 trillion, with Lagos N493.32 billion; Rivers N266.94 billion, Akwa Ibom N239.21billion and Delta N235.86 billion among the top debtors in the country.
Speaking on his commitment to generating revenue and stopping overreliance on borrowing, charged the committee to improve the country’s revenue profile and business environment.
He also directed all government ministries and departments to cooperate fully with the committee towards achieving their mandate.
President Tinubu, while stressing the significance of their assignment, informs the Committee that his administration carries the burden of expectations from citizens who want their government to make their lives better.
“We cannot blame the people for expecting much from us. To whom much is given, much is expected,” Tinubu said.
“It is even more so when we campaigned on a promise of a better country anchored on our Renewed Hope Agenda. I have committed myself to use every minute I spend in this office to work to improve the quality of life of our people.”
Acknowledging the country’s current international standing in the area of tax, the President said the nation is still facing challenges in other sectors such as ease of tax payment and its Tax-to-GDP ratio, which lags behind even Africa’s Continental average.
“Our aim is to transform the tax system to support sustainable development while achieving a minimum of 18% tax-to-GDP ratio within the next three years.
“Without revenue, government cannot provide adequate social services to the people it is entrusted to serve.
“The Committee is expected to deliver a schedule of quick reforms that can be implemented within thirty days. Critical reform measures should be recommended within six months, and full implementation will take place within one calendar year,” the President directed.
Recounting the President’s sterling track record on revenue transformation, the Special Adviser to the President on Revenue, Zacchaeus Adedeji described the committee members, drawn from the public and private sectors, as accomplished individuals from various sectors.
Mr. President, you have the pedigree when it comes to revenue transformation. You demonstrated this when you were the Governor of Lagos State over 20 years ago,” the Special Adviser said.
Chairman of the Committee, Taiwo Oyedele, pledged the commitment of members to give their best in the interest of the nation.
“Many of our existing laws are out-dated, hence they require comprehensive updates to achieve full harmonisation to address the multiplicity of taxes, and to remove the burden on the poor and vulnerable while addressing the concerns of all investors, big and small,” Oyedele said.