- FG Proposes to Spend N2.26tn on Debt Servicing
The Federal Government has proposed to spend a total of N2.26tn on debt servicing in the 2019 fiscal year.
This was contained in the detailed budget proposal which was obtained by our correspondent in Abuja.
The proposal for debt servicing is more than 25 per cent of the N8.83tn which the Federal Government proposed for 2019.
The government had proposed to spend N2.01tn on debt servicing in 2018. This means that the proposal for debt servicing in 2019 is 12.44 per cent higher than what was proposed for the same purpose in 2018.
However, actual debt servicing expenditure can vary from proposed debt servicing expenditure. In the first nine months of 2018, for instance, the Federal Government had spent N2.21tn on domestic debt servicing which was more than it had proposed to use for debt servicing in the entire year.
A number of economic actors, including the International Monetary Fund, had said that the debt servicing had been gulping a large percentage of the country’s revenue.
The IMF had, for instance, in November 2018 said that Nigeria was spending more than 50 per cent of its revenues on servicing of debts.
Speaking at the presentation of the Regional Economic Outlook for Sub-Saharan Africa – Capital Flows and the Future of Work in Abuja on November 8, 2018, Senior Resident Representative and Mission Chief for Nigeria, African Department, Amine Mati, said Nigeria’s expenditure on debt servicing was high compared to its income.
Mati said that although Nigeria’s debt to Gross Domestic Product remained low at between 20 and 25 per cent, the country spent a high proportion of its revenue on debt servicing as a result of low revenue generation.
He added that the debt servicing to revenue ratio was more than 50 per cent while for sub-Saharan Africa, the rate was about 10 per cent; a figure he said was too high and reminiscent of what the region went through in the period of following debt relief at the beginning of the 21st century.
Mati said, “Security issues are exacting a significant human toll in a number of countries. Debt to GDP ratio is increasing in the past five years. Public debt is diverting more resources towards debt servicing.”