Nigeria's Economy In Dire Straits, DMO, VP, House Of Reps Express Concerns

Despite promises being reeled out by the presidential candidates in the forthcoming general elections to turn around the economy on assumption of office, most Nigerians believe that the economy is in dire straits, and only coordinated synergy between the monetary and fiscal policy measures could see her through.

The general consensus among Nigerians is that most of the promises are generic and shallow on the needed strategy to address problems of hunger, poverty, insecurity, inflation, mong others.

At the international front, Nigeria is not faring better either as poor ratings may be denying the largest economy in Africa the opportunity to access international markets for the much needed funds to service its burgeoning deficits in her budgets and other needs, according to the Debt Managent Office, (DMO).

Specifically, the global lenders and investors are avoiding debt instruments of countries with Category ‘B’ economic ratings, of which Nigeria has falling into.

Patience Oniha, Director General of DMO said Nigeria must ramp up its revenue generation efforts while seeking alternative sources of funding on a global scale. “We really can’t survive like this,” she said.

But the increasing role of the agency as the ‘packager and defender of loans’ is not going down well with most Nigerians.

The House of Representatives Committee on Aids, Loans and Debt Management on Monday grilled Oniha, over rise in domestic debts totalling N3.3 trillion in 2023.

Rep. Ahmed Safana, the Chairman of the Committee, in Abuja, expressed surprise at the astronomical increase in debt profile of the country through borrowing by the government.

The committee rejected continuous borrowing by the Federal Government.

According to the lawmaker, there is a huge increase in domestic and external debts from borrowed funds by the Federal Government and the DMO is entrusted with role of ensuring frequency of repayment.

He said that there was N1trillion increase in the debt profile of the country in the last one year, while calling on DMO, as relevant agency, to halt the frequency of borrowings.

The committee said borrowings by government at any level must be tied to specific projects and demanded details of the N3.55 trillion earmarked for borrowing in 2023 budget.

At the budget session, a member of the Committee, Rep. Emeka Azubogu (Anambra-PDP) decried frequent borrowings while others demanded details of the personnel cost of the agency and the number of its employees.

Similarly, Yemi Osinbajo, vice president, Monday, raised a fresh concern over how Nigeria manages its foreign-exchange market, a development that has perpetually kept the economy on its knees.

Osinbajo’s views may have stirred a new debate about what is arguably the biggest investor worry for Africa’s biggest economy.

The veepee has been consistent in his criticism of the country’s exchange rate management, which has frozen investment flows into the country by its fixation on demand management, and the number-two citizen has suggested that attention be paid to fixing the supply side.

This is even as the propensity for foreign consumption of goods by the privileged elite continues to rise on daily basis.

According to the DG, the domestic debt profile of the country stood at N3.685 trillion and there is another N2.57 billion from external borrowing by government.

Oniha, while testifying before the House Committee on Aids, Loans, and Debt Management to defend the DMO’s 2023 budget stated that the Federal Government had failed to meet its external borrowing target and that it was now looking to lenders in the United States and Europe.

“Where there is an issue is the new external borrowings. What was provided for in the 2022 budget is N2.57 trillion of new external borrowings and this, in naira terms at the budget exchange rate, is $26 billion. The reality is that if it were before, by now we would have issued Eurobonds to raise the money and we would be in good business.“But let us say from the fourth quarter of last year, the international capital markets have not been opened to countries like Nigeria. So, in 2021, there was about $6bn to raise. We raised $4 billion for that one. But this year, it is $1.25 billion.

“The international markets are not looking for countries with our ratings –B ratings. The invasion of Ukraine by Russia, as you know, turned around things in the world significantly. So, inflation rates are high, interest rates are high and investors are saying there are a lot of uncertainties as to what will happen.

“There is a threat of recession. So, what they have decided to do is to put their money in the G-7 securities: United States, Germany, France, Japan, and so on. Those countries also issue bonds. So, that is where the investors are putting their money and rates have gone up significantly,” Oniha told the parliamentarians.

Two global economic analysts and ratings, Moody’s and Fitch, recently downgraded Nigeria to Category ‘B’ economy.

Speaking on debt service, the DMO boss stated that the government must pay attention to the percentage of deficit in its annual budgets.
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She said, “We really need to look at revenues. For debt to be sustainable medium term, you must earn revenues. We should not have a budget of N17 trillion and N10 trillion of deficit, and out of that (there is) new borrowing of N8.8 trillion, which is 50 percent of your budget.”

Meanwhile, according to DMO, the country’s total debt rose to N26.215 trillion in the third quarter of the year from N25.70 trillion in the second quarter of the year.

The nation’s debt grew by 16.88 percent comparatively in the 12 months to September, according to DMO