GOVERNMENT ministers have said they are not panicking about the fact that Nigeria’s debt-to-gross domestic product (GDP) ratio has ballooned to 33% as a result of increased borrowing brought about by the coronavirus pandemic.
Due to the global pandemic, Nigeria has had to resort to heavy borrowing, with as much as a third of the 2020 and 2021 budgets financed by international lenders. Bodies such as the World Bank, International Monetary Fund and African Development Bank have had to step in to bail Nigeria out, increasing her debt portfolio.
However, finance minister Zainab Ahmed, said she still believes that the country’s debt-to-GDP ratio is still low at 33%. According to Mrs Ahmed, the federal government’s borrowing is accurately planned to boost growth and development of the economy.
Mrs Ahmed said: “ We have made sure that we have a debt management strategy and a medium-term debt management strategy. So, this borrowing is not being done by just a fiat as it is encapsulated in a plan and we are guided by the fiscal responsibility that sets the limit of how much you can borrow at any particular time.
“We have also structured the borrowing to make sure we have a good balance between domestic borrowing as well as external financial borrowing. So truly, in 2020 because of a Covid-19 crisis, we ended up borrowing more than we had planned because we have to change all our plans to be able to accommodate revenue crash remember, so we have to change our plans to be able to borrow more to contain the pandemic.
“So the borrowing we are doing now is to make sure we are improving critical infrastructure unnecessary for the sustained growth of this economy if we don’t do these investments now, our country will not develop and grow. We are careful of how we borrow and I keep saying and I’ve said it and I’m saying it again today that the debt levels in Nigeria is not high.
“If you consider the size of the Nigerian economy, we have a debt to GDP ratio now that is at 33% Some of the countries in Africa that you can compare us with have as much as 70% of debt.”
She maintained that the federal government is doing its bid at increasing revenue avenues through tax incentives and creating an enabling environment for businesses to thrive. Mrs Ahmed conceded that the government needs to provide space for businesses to be able to work better so that they can produce better and pay more, more taxes.