Why Nigeria Can’t Stop Borrowing — CBN

The Central Bank of Nigeria (CBN) has said that Nigeria cannot
stop burrowing, especially when it is necessary as it is part of
fiscal responsibility.

The CBN Governor, Mr. Godwin Emefiele, said this on Friday in
Abuja at the National Dialogue on the Nigeria’s rising debt
profile, titled: “The Rising Public Debt in Nigeria and the
Challenges of National Development” organised by the ActionAid
Nigeria (AAN).

This is as AAN and stakeholders, expressed worry over unstable
levels of borrowings and rising national debt profile under the
President Muhammadu Buhari-led administration and rising poverty
level.

According to Emefiele, represented by the Assistant Director,
Monetary Policy Department, CBN, Dr. Tawose Joseph, there is no
crime in borrowing, but that there should be monitoring and
evaluation of the money borrowed and the purpose meant for.

“Debt is part of fiscal responsibility. Debt is never a crime or
a sin. Private entity also borrows to survive. But what matter most
is the quantum of the debt and the usage of the debt as well. If a
money is burrowed as a result of shortage of income generation.

“When you compare the income and expenditure and is efficiently
used is part of government responsibility. But where the fear is
when it is above the threshold.

“CBN understand that when there is crisis in an economy, then
the burden of debt would be something. That is why the conventional
and non-conventional instruments is there to ensure price stability
in the economy,” he said.

He added that the CBN formulates policies that positively affect
the grassroots people, and added that the Apex Bank considers facts
and figures before making policies.

He said that the CBN has rolled out 37 initiatives to positively
affect the economy, but noted that there are challenges despite
that intervention.

Stakeholders bemoan unstable borrowing, rising
debts

Speaking earlier, the AAN Country Director, Ene Obi, expressed
worry over upward trend in the nation’s debt profile, which she
said keeps piling up and closing the fiscal space for effective
delivery of public goods.

According to her, as at 31 December 2020, data from the Debt
Management Office (DMO) showed that the nation’s total debt stock
stood at N32, 915,514.85trn ($86,392.54 billion).

Obi said that continued borrowing is clearly not sustainable
both in the short and the long-term but rather enslaving the
citizens and future generations.

She said that the Nigerian government needs to proactively
garner the political will to reduce the size and cost of
governance, fight corruption, close leakages in the revenue
generation and utilization as it makes no sense at all giving away
large chunk of “our resources on tax incentives but continue to
seek funding abroad and locally.

“It is in view of these that ActionAid is convening of a
National Dialogue on the Rising Public Debt, as an antipoverty
agency, ActionAid is worried that if the unchecked borrowing
continues, Nigeria’s efforts at dealing with its challenges of
unemployment, failing social services and infrastructure deficit
and rising incidences of poverty will be a mirage.

“It is also concerned that the country is not exploring other
avenues such as blocking leakages from corruption, illicit
financial flows, reducing cost of governance amongst others as
alternatives to unsustainable and conditional laden debt.

“Recall that in 2006 the Nigerian government secured a debt
relief from the international consortium of creditors otherwise
known as the ‘Paris Club’. The key argument of the government then
was the inability of the country to meet its development
obligations due to its debt servicing obligations.

“At the time the country was indebted to the Paris Club to the
tune of $36bn. Giving the debt servicing obligation, that affected
the annual expenditure of education and health care as was argued
by the President at that time, thus making it an unsustainable
venture in the journey to National development,” she said.

In her keynote, the Minister of Finance, Budget and Planning,
Mrs. Zainab Ahmed, represented by the Head, Marketing Development
Department (MDD), Debt Management Office (DMO), Mr. Monday Usiade,
said the borrowings by the Federal Government followed due process
as the National Assembly approved and passed budgets including
monies to be borrowed.

She also commended AAN for conveying the dialogue as it will
provide an avenue to broaden the discourse about public debts in
Nigeria.

She, however, acknowledged that debt profile is really
increasing, saying, “The government acknowledges that the nation’s
public debt is growing, and it is also important to add that all
borrowings both domestic and external are approved by the National
Assembly before they are incurred, that is the representatives of
the people.

“The borrowings are approved in the budget that is used to
finance the budget offices and other projects presented by the
various ministries, departments and agencies of the government. As
you may be aware the federal government conducts and publishes debt
sustainability analysis on the public debt portfolio on annually
basis.

“The DMO exercise helps to determine among others. The results
of the DSO are used to prepare the national budget, then the budget
is now presented to the National Assembly who has the
responsibility of appropriation including the amount that will be
borrowed.

“The federal government also develops its medium-term budget
management strategies on regular basis. The NTDS helps to set
public debt management objectives to ensure that borrowing
operations are conducted in a responsible manner, and the cost of
enlist profile of the debt portfolio are within reasons,” Ahmed
said.

She also explained that some of the reasons the government
publishes relevant information on public debts include debt
transparency and accountability and engender public discourse of
this nature.

Also, the National President, Nigeria Labour Congress (NLC),
Comrade Ayuba Wabba, represented by Head Women and Youth of the
congress, Mrs, Rita Goyit, lamented that the national debt profile
has made poverty risen including widening inequality gap, and the
people are living in abject poverty, which is at a worrisome
height.

Wabba who said this has led to other vices challenging the
security and peace of the country, also lamented poor treatment of
workers across the country as issues that affect them, especially
the minimum wage debacle, where workers are not being paid what
they ought to be paid.

The Central Bank of Nigeria (CBN) has said that Nigeria cannot
stop burrowing, especially when it is necessary as it is part of
fiscal responsibility.

The CBN Governor, Mr. Godwin Emefiele, said this on Friday in
Abuja at the National Dialogue on the Nigeria’s rising debt
profile, titled: “The Rising Public Debt in Nigeria and the
Challenges of National Development” organised by the ActionAid
Nigeria (AAN).

This is as AAN and stakeholders, expressed worry over unstable
levels of borrowings and rising national debt profile under the
President Muhammadu Buhari-led administration and rising poverty
level.

According to Emefiele, represented by the Assistant Director,
Monetary Policy Department, CBN, Dr. Tawose Joseph, there is no
crime in borrowing, but that there should be monitoring and
evaluation of the money borrowed and the purpose meant for.

“Debt is part of fiscal responsibility. Debt is never a crime or
a sin. Private entity also borrows to survive. But what matter most
is the quantum of the debt and the usage of the debt as well. If a
money is burrowed as a result of shortage of income generation.

“When you compare the income and expenditure and is efficiently
used is part of government responsibility. But where the fear is
when it is above the threshold.

“CBN understand that when there is crisis in an economy, then
the burden of debt would be something. That is why the conventional
and non-conventional instruments is there to ensure price stability
in the economy,” he said.

He added that the CBN formulates policies that positively affect
the grassroots people, and added that the Apex Bank considers facts
and figures before making policies.

He said that the CBN has rolled out 37 initiatives to positively
affect the economy, but noted that there are challenges despite
that intervention.

Stakeholders bemoan unstable borrowing, rising
debts

Speaking earlier, the AAN Country Director, Ene Obi, expressed
worry over upward trend in the nation’s debt profile, which she
said keeps piling up and closing the fiscal space for effective
delivery of public goods.

According to her, as at 31 December 2020, data from the Debt
Management Office (DMO) showed that the nation’s total debt stock
stood at N32, 915,514.85trn ($86,392.54 billion).

Obi said that continued borrowing is clearly not sustainable
both in the short and the long-term but rather enslaving the
citizens and future generations.

She said that the Nigerian government needs to proactively
garner the political will to reduce the size and cost of
governance, fight corruption, close leakages in the revenue
generation and utilization as it makes no sense at all giving away
large chunk of “our resources on tax incentives but continue to
seek funding abroad and locally.

“It is in view of these that ActionAid is convening of a
National Dialogue on the Rising Public Debt, as an antipoverty
agency, ActionAid is worried that if the unchecked borrowing
continues, Nigeria’s efforts at dealing with its challenges of
unemployment, failing social services and infrastructure deficit
and rising incidences of poverty will be a mirage.

“It is also concerned that the country is not exploring other
avenues such as blocking leakages from corruption, illicit
financial flows, reducing cost of governance amongst others as
alternatives to unsustainable and conditional laden debt.

“Recall that in 2006 the Nigerian government secured a debt
relief from the international consortium of creditors otherwise
known as the ‘Paris Club’. The key argument of the government then
was the inability of the country to meet its development
obligations due to its debt servicing obligations.

“At the time the country was indebted to the Paris Club to the
tune of $36bn. Giving the debt servicing obligation, that affected
the annual expenditure of education and health care as was argued
by the President at that time, thus making it an unsustainable
venture in the journey to National development,” she said.

In her keynote, the Minister of Finance, Budget and Planning,
Mrs. Zainab Ahmed, represented by the Head, Marketing Development
Department (MDD), Debt Management Office (DMO), Mr. Monday Usiade,
said the borrowings by the Federal Government followed due process
as the National Assembly approved and passed budgets including
monies to be borrowed.

She also commended AAN for conveying the dialogue as it will
provide an avenue to broaden the discourse about public debts in
Nigeria.

She, however, acknowledged that debt profile is really
increasing, saying, “The government acknowledges that the nation’s
public debt is growing, and it is also important to add that all
borrowings both domestic and external are approved by the National
Assembly before they are incurred, that is the representatives of
the people.

“The borrowings are approved in the budget that is used to
finance the budget offices and other projects presented by the
various ministries, departments and agencies of the government. As
you may be aware the federal government conducts and publishes debt
sustainability analysis on the public debt portfolio on annually
basis.

“The DMO exercise helps to determine among others. The results
of the DSO are used to prepare the national budget, then the budget
is now presented to the National Assembly who has the
responsibility of appropriation including the amount that will be
borrowed.

“The federal government also develops its medium-term budget
management strategies on regular basis. The NTDS helps to set
public debt management objectives to ensure that borrowing
operations are conducted in a responsible manner, and the cost of
enlist profile of the debt portfolio are within reasons,” Ahmed
said.

She also explained that some of the reasons the government
publishes relevant information on public debts include debt
transparency and accountability and engender public discourse of
this nature.

Also, the National President, Nigeria Labour Congress (NLC),
Comrade Ayuba Wabba, represented by Head Women and Youth of the
congress, Mrs, Rita Goyit, lamented that the national debt profile
has made poverty risen including widening inequality gap, and the
people are living in abject poverty, which is at a worrisome
height.

Wabba who said this has led to other vices challenging the
security and peace of the country, also lamented poor treatment of
workers across the country as issues that affect them, especially
the minimum wage debacle, where workers are not being paid what
they ought to be paid.