DMO: Nigerian Economy Too Strong to Ask for Debt Forgiveness

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  • DMO: Nigerian Economy Too Strong to Ask for Debt Forgiveness

The Director-General of Debt Management Office (DMO), Dr. Abraham Nwankwo, yesterday rejected a suggestion by the Senate Committee on Local and Foreign Debt that the federal government should seek debt forgiveness in the face of Nigeria’s rising debt.

Nwankwo, who expressed his opposition to the advice while appearing before the committee to defend the 2017 budget of DMO in the National Assembly, had been advised by the committee to exploit the goodwill and popularity of President Muhammadu Buhari in the international community to ask for debt forgiveness in view of biting economic crisis confronting the nation.

But Nwankwo told the committee that Nigeria had no reason to contemplate debt forgiveness at this time because it has remained a strong economy and hence, had no reason to beg anyone for forgiveness.

According to him, even though the economy is facing a myriad of challenges, such challenges are too minute to compel the nation to ask for debt forgiveness.

“Nigeria is not in a position to beg for forgiveness. We are still a strong economy. Although there are challenges but we have not got to the stage to ask for debt forgiveness,” Nwankwo insisted.

But this submission drew the ire of members of the committee who queried the rational and logic behind Nwankwo’s reasoning, pointing out that Nigerians lived in a more bouyant and robust economy in 2006 when the government of former President Olusegun Obasanjo exited the Paris Club by riding on the horse of debt forgiveness.

They therefore queried Nwankwo as to why he felt it was more viable for the country to secure debt forgiveness 11 years ago than now, bearing in mind that Nigeria’s economy was not in recession neither was the rate of inflation or cost of living as high as it is now.

But Nwankwo could not give any convincing or justifiable reason for his position as he only muttered some words to defend himself, saying he did not appear before the committee to discuss the solutions to Nigeria’s economic problems.

“Beyond that, I don’t think I have the mandate and I don’t want to presume that I have the capability to come here and pontificate on how all the problems of Nigeria can be resolved because that is not my mandate. And I will be very presumptuous to be saying that,” he said.

However, he disclosed that Nigeria’s total debt as at December 31, 2016, rose to $57.39 billion, the equivalent of N17.36 trillion comprising $11.41 billion (N3.48 trillion) foreign debt and $45.98 (N13.88 trillion) domestic debt.

The DMO boss said the figures showed that external debt rose by 6.53 per cent in 2016 from $10.71 billion on December 31, 2015 while the domestic debt rose from N8.84 trillion in December 2015 to N11.06 trillion in December, 2016, representing an increase of 25.11 per cent.

Nwankwo said the marginal rise in the domestic debt was the offshoot of net issuances of federal government bonds and treasury bills.

He further disclosed that Nigeria paid $353.093 million for external debt service in 2016 as against the projected $421.893 million, implying a shortfall of 16.31 per cent difference between the projected debt service estimate and what was actually paid.

About the Author

Samed Olukoya
CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya; Email: [email protected]

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