Aidoghie Paulinus, Abuja
The Federal Government has rebutted statements by former Vice President Atiku Abubakar regarding Nigeria’s debt profile.
The Minister of Information and Culture, Alhaji Lai Mohammed, in a statement by the Special Assistant to the President (Media), Office of the Minister of Information and Culture, Segun Adeyemi, said that Abubakar’s statement on the country’s debt profile issued on Tuesday was ‘ill-informed’.
Abubakar had said the huge amount spent by the country on servicing debts when matched with the revenue accruing to the country was an indication that the country is facing a serious financial crisis.
The former presidential candidate of the Peoples Democratic Party (PDP) in the 2019 general election voiced serious concerns that if revenues do not increase quickly, the country could become insolvent and creditors may foreclose on Nigeria as has happened in Sri Lanka and the Maldives.
But Mohammed stated that while the Federal Government welcomed constructive criticism, it must be based on facts.
‘There is no doubt that former Vice President Atiku Abubakar loves our country and wishes it well, otherwise, he would not have sustained his serial quest for the country’s highest position. One can only hope that his resort to the use of such words as “precipice”, “foreclosure” and “economic ruin” does not reflect anything but best wishes for the country at this time,’ Mohammed said in the statement.
Giving details about the country’s debt profile, Mohammed disclosed that the figure of Nigeria’s debt to revenue ratio of 99 per cent in the first quarter of 2020, quoted by Abubakar, was not in the Medium-Term Expenditure Framework and Fiscal Strategy Paper from where he claimed he obtained it.
‘We are also not able to ascertain the source of the first quarter figures of N943.12 billion for debt servicing and N950.56 billion for retained revenue, which he also quoted,’ Mohammed added.
The minister further said the debt service provisions in the annual budgets included principal repayments, interest payments and all other applicable charges.
‘Therefore, the statement that debt servicing does not equate to debt repayment is not only wrong but ill-informed,’ Mohammed also said.
On Abubakar’s suggestion on increase in revenue in the country, Mohammed stated that the Buhari administration has introduced several measures to shore up revenues, amongst which were the measures as the passage and implementation of the Finance Act, 2019, various on-going reforms in the Oil and Gas, Tax Administration and Collections, as well as the Strategic Revenue Growth Initiatives.
‘Furthermore, Alhaji Mohammed said since Nigeria’s debt service is expressly provided in the annual budgets and the debt service payments are made as and when due, the issue of creditors foreclosing on Nigeria, as strangely predicted by the former Vice President, does not arise.
‘He said contrary to the statement credited to Alhaji Abubakar that Nigeria has experienced an alarming and unprecedented increase in the ratios of debt to GDP and debt service to revenue, indeed, Nigeria’s ratio of debt to GDP is one of the lowest in the world at 19.00 per cent as at December 31, 2019, while Government is making concerted efforts to increase revenue so as to bring down the ratio of debt service to revenue,’ Adeyemi wrote.
‘One of the reasons why debt service to revenue is high is because revenue generation in Nigeria has been low, with over-dependence on the oil sector. This is corroborated by the fact that the ratio of Nigeria’s tax revenue to GDP is one of the lowest in the world at about 6 percent.’
Mohammed added that unlike what had obtained in the past when the nation borrowed to service the indulgence of a few individuals, the loans being obtained by the current administration are being primarily used to finance infrastructure projects, which include roads, railways, bridges and power, and the loans are long-term in nature, which would benefit present and future generations.
‘We have said that in the face of massive infrastructural decay, no responsible government will sit by and do nothing. This administration’s borrowing, therefore, is aimed mostly at revamping our infrastructure. The loans for the educational sector will contribute to the development of our human capital while the loans for the agricultural sector will help the move to diversify the economy,’ Mohammed stated.
Mohammed further said irrespective of the negative impact of the COVID-19 pandemic on the country’s economy, the Federal Government continued to take measures to mitigate the effects of the pandemic, and assured that the Federal Government will always act in the best interest of Nigerians.