Growing debt, good for the country – DMO

Minister of Finance, Okonjo-Iweala

Despite warnings by economists against the country’s increasing debt profile, the Debt Management Office has said the continued rise in both domestic and external debts is a good thing for Nigeria.

The DMO argued that the government’s future income streams would comfortably address the rising debts.

Speaking in an exclusive interview with our correspondent in Abuja, the Director-General, DMO, Mr. Abraham Nwankwo, said the country’s growing debt profile was good, considering the fact that the Federal Government must borrow to meet its obligations.

He said, “It is a good thing for the country because if we need to build roads and we borrow money to build the roads, is it not a good thing? It is a good thing. If you need to build roads and you don’t have the resources now and you expect that your future streams of income should be enough to pay the debt, why don’t you borrow the money today to build the road?

“Nigeria’s debt is sustainable. Moreover, government has over the past four years taken additional initiatives to make it even more sustainable than it used to be. And this is in terms of being prudent, fiscal consolidation, reducing the fiscal deficit, and reducing the amount borrowed domestically yearly as is seen in the annual budgets.”

The external debt alone rose by $143m in the first quarter of 2013 to $6.67bn from $6.527bn at the end of last year, during which it rose consistently throughout.

The development caused analysts, including the Governor of the Central Bank of Nigeria, Mr. Lamido Sanusi, to warn that it was not in the nation’s best interest.

In December 2012 at the Honorary International Investment Council Conference in London, Sanusi argued that if the existing level of borrowings from big nations continued, the huge debt profile would place “undue burden on posterity.”

“We are borrowing more money today at a higher interest rate, while leaving the heavy debt burden for our children and grandchildren,” he had said.

But reacting to the warnings, Nwankwo said experts should cross-check their facts before commenting on the debt profile.

He said, “We will encourage all Nigerians, when they are making statements, to always try to convey some meanings, realities, facts and figures, which other parties can use in business and intelligent discussions.

“So, in practical terms, yes Nigeria’s debt, compared to what it was last year, is growing. But also Nigeria’s economy is growing. I challenge you to go and look up what was Nigeria’s Gross Domestic Product.”
The Punch