Nigeria’s Finance Minister, Zainab Ahmed, has once again argued that Nigeria does not have a debt problem. She emphasised this earlier this month in Senegal when she spoke to CNBC Africa on the sidelines of the IMF’s International Conference on Sustainable Development and Debt Sustainability which held in the country’s capital city of Dakar.
Recall that this is not the first time the Minister has made a similar claim. Back in August, she argued that Nigeria’s debt profile was not a problem, even as she called out the “insensitivity” of experts questioning the government’s borrowings.
But there is a problem
However, Mrs Ahmed did acknowledge that there is a problem. According to her, what Nigeria has is a revenue challenge. She also noted that since this problem was identified, the President Buhari-led government has been working hard to solve it by looking at various means to boost revenue.
“Currently, Nigeria’s debt is at N25 trillion; that is about $83 billion. And at $83 billion, we are just at 18.99%…so 19% debt to GDP. I hear people say Nigeria has a debt problem. We don’t have a debt problem. What we have is a revenue challenge and the whole of this government is currently working on how to enhance our revenues, to ensure that we meet our obligation to service government as well as to service debt.”
2020 budget and more debt
Now, the Nigerian Senate, yesterday, passed a 2020 budget of N10.59 trillion with a deficit of N2.18 trillion. This is a lot of money, which means that the Nigerian government may not have a choice but to resort to more borrowing. When the Minister was asked to comment on how Nigeria intends to make the future debts more sustainable, she said the following:
“The way to make it more sustainable is to make sure that we conduct regular debt sustainability analysis. So, for every debt we are going to add, we would have incorporated it into the national debt, looking at what is going to be the impact on debt service and the total debt stock.”
Meanwhile, in further attempt to justify more borrowing from the government, the Minister argued that no country can adequately develop by relying on revenue alone. In other words, debt is also important.
Need for sustainable debt
In the course of the interview, the Minister, however, emphasised the need for Nigeria and other African countries to balance the need for development and debt sustainability. Note that Nigeria and Africa at large have a huge development deficit, even as revenue is not enough to take care of these developmental needs. As such, borrowing becomes essential. But this notwithstanding, there is a need to ensure that borrowing is responsible, she advised.