Nigeria’s Debt Profile Increases
There has been an alarming increase of about 148 percent in Nigeria’s external debt stock according to data made public by the Debt Management Office(DMO).
The data showed that in about four years, the country’s external debt soared to $25.61bn on March 31, 2019 from $10.32bn on June 30, 2015.
Recall as previously reported by GISTOK, Nigeria’s total debt profile as at March 31, 2019 as released by the DMO, currently stands at ₦24.947 Trillion.
A breakdown of the country’s external debt shows Eurobonds worth $10.87bn accounted for the largest part of the external debt, as it rose by 625 per cent from $1.5bn on June 30, 2015.
In the period under review, the debt owed to the World Bank rose to $8.90bn from $6.19bn.
China, through the Export-Import Bank of China, is the third-biggest lender to Nigeria with a loan of $2.55bn as of March 31, 2019, up from $1.39bn as of June 30, 2015.
Nigeria’s external debt profile also comprises those from the African Development Bank ($1.25bn), African Development Fund ($834.18m), Arab Bank for Economic Development in Africa ($5.88m), Export Development Fund ($59.15m), Islamic Development Bank (15.51m) and the International Fund for Agricultural Development ($176.19m).
The country’s bilateral debts from France (Agence Française de Développement), Japan (Japan International Cooperation Agency), India Exim Banking of India and Germany (KfW) stood at $366.07m, $74.63m, $26.46m and $171.79m, respectively.
This development has been identified as a cause of worry by financial and economic experts who spoke with Punch, particularly as they lamented that if the borrowings are not matched with corresponding and visible projects, it may be spelling doom for the country.
“The increase in external debt is something to worry about even though we have not exceeded the threshold and that was because we rebased our GDP.
But what should worry us more is our debt servicing, which is increasing at a rate that is not comfortable. We should be cautious how we borrow, and let us know what we are borrowing for.
“I am not in support of Eurobond because it’s commercial and it has a higher rate. The World Bank and the ADB loans are flexible; if you cannot pay, you can renegotiate and the rates are lower.
The multilateral institutions are better than Eurobonds because they will give you a long period of repayment. But we have to be very careful with the Chinese loans because the Chinese are very shrewd negotiators,” Prof Akpan Ekpo, a former Director- General, West African Institute of Financial and Economic Management said.
Similarly, the Managing Director and Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane, said, “Part of our external reserves is borrowed money. We have borrowed but let us see the projects that the borrowings have been used to accomplish. But if they cannot show us the completed projects, then we have a problem.”
“As long as it is to finance projects, it is a good decision. But if it is to finance consumption, then we are in trouble,” Rewane said.