Mounting debt: DMO blames COVID-19, experts say borrowing from CBN dangerous
Nigeria’s debt profile has been on the increase because of the impact of revenue crash and the crises trailing the coronavirus pandemic on the economy, the Debt Management Office has said.
However, some economists and experts have warned of the dangers of continued borrowing from the Central Bank of Nigeria by the Federal Government.
Both the DMO and experts were responding to questions posed by our correspondents following the claim by the Edo State Governor, Godwin Obaseki, that the country printed N60bn to augment what the three tiers of government shared in March.
Obaseki reportedly stated on Thursday that Nigeria was in huge financial trouble, alleging that the Federal Government printed N60bn in March as part of federal allocation last month.
The Edo governor also expressed worry over the country’s increased borrowing, saying it was wrong to continue borrowing without a tangible plan for debt repayment.
Nigeria, like others, increased borrowing due to COVID-19 – DMO
In a reply to an enquiry from one of our correspondents, the Director-General of DMO, Patience Oniha, blamed crashed revenue and COVID-19 for increased borrowing.
She said the rate of borrowing had started to come down until COVID-19 forced Nigeria, like many other nations, to increase its borrowing in order to buoy the economy.
Oniha said, “The higher level of borrowing from 2015 due to the revenue crash occasioned by crude oil started trending downwards thereafter.
“Unfortunately, COVID reversed that trend. That became necessary and many countries including the UK and USA also embarked on new borrowing.”
She added, “It is not correct to say that the economic team is not concerned about how the debt will be repaid. You know that a Debt Sustainability Analysis and Medium Term Debt Strategy are done.”
The DMO boss noted that apart from the Federal Government, the states are also borrowing increasingly too.
She added, “I am unable to comment on the ‘top-up’ at Federal Accounts Allocation Committee as the DMO is not involved in the determination of how much is shared at FAAC. Punch
