Sanusi, Okonjo-Iweala differ over rising national debt

THERE is apparently major disagreement between the managers of the country’s monetary and fiscal policies over rising debt profile.

While the Central Bank of Nigeria (CBN) Governor, Lamido Sanusi, warned of the danger of accumulating more debts for future generations, the Coordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala, said there was no cause for alarm as the current loans are not from the Paris Club, which comes with purely commercial interest rates but are highly concessional loans with long periods of maturity.

According to her, the country was doing well in terms of its debt to Gross Domestic Product (GDP) ratio, now at 17 per cent, but warned that the country should not go beyond the 25-30 per cent sealing it had set for itself.

On the other hand, the Director General, Debt Management Office (DMO), Dr Abraham Nwankwo, said Nigeria will continue to borrow, stressing that every country in the world borrows; even the most financially prudent countries like Germany, United States and others borrow.

He even confirmed that the Federal Government would still borrow more money in 2013.

Speaking at the 13th session of the Honorary International Investments Council (HIIC) meeting in London recently, Sanusi urged the Federal Government not to allow the present and unborn generations inherit the heavy burden of foreign debts cautioning that Nigeria, currently under the suppressing weight of the heavy burden of foreign debts is in great danger.

“We are borrowing more money today at a higher interest rate while leaving the heavy debt burden for our children and grandchildren. For example, if you receive your salary and everyday the money is not enough, you have two options to adjust yourself. Either check your expenditure or check your wages,” he counselled.

He urged the ruling class and the older generations to set good example and educate the coming generations for a better and secured future, stating that such example should be set by not accumulating debt for future generations to inherit.

According to DMO, the country’s external debt profile as of September 30, 2012 was $6.2 billion, while domestic debt was standing at N6.3trillion. It also stated that the debt sustainability indicators showed that the country’s debt stock was sustainable.

It also said the country’s total debt profile might hit $25 billion by 2015, adding that the debt gross domestic product (GDP) ratio was 18.65 per cent, as against global ratio of 40 per cent.

The DMO Director General further said: “for 2012, Nigeria’s external debt is projected at $9,021.53 billion; 2013, $12,165.10 billion; 2014, $14,585 billion and 2015, $16,765 billion, adding that “a breakdown for domestic debt is projected at, for 2012, $6,483.81 billion; 2013, $7,125.93 billion; 2014, $7,792.41 billion and 2015, $8, 4441.86 billion.”