Director-General of the Debt Management Office (DMO), Patience Oniha, has said that Nigeria cannot survive on only borrowing and so must gear up it’s revenue drive and look for alternative sources of funds internationally.
She stated this when she appeared before the House of Representatives Committee on Aids, Loans and Debt Management to defend the DMO’s 2023 budget,
According to her, it has been difficult for Nigeria to borrow from the international markets as global lenders and investors are shunning countries with Category ‘B’ economic ratings.
“We really can’t survive like this,” Oniha stated.
The director general pointed out that the Federal Government had not been able to meet its external borrowing target and was now looking in the direction of lenders in the United States and Europe.
According to her, “Where there is an issue is the new external borrowings. What was provided for in the 2022 budget is N2.57 trillion of new external borrowings and this, in naira terms at the budget exchange rate, is $26 billion.
“The reality is that if it were before, by now we would have issued Eurobonds to raise the money and we would be in good business. But let us say from the fourth quarter of last year, the international capital markets have not been opened to countries like Nigeria. So, in 2021, there was about $6bn to raise. We raised $4bn for that one. But this year, it is $1.25bn.”
Oniha further explained that “The international markets are not looking for countries with our ratings –B ratings. The invasion of Ukraine by Russia, as you know, turned around things in the world significantly. So, inflation rates are high, interest rates are high and investors are saying there are a lot of uncertainties as to what will happen. There is a threat of recession. So, what they have decided to do is to put their money in the G-7 securities: United States, Germany, France, Japan, and so on. Those countries also issue bonds. So, that is where the investors are putting their money and rates have gone up significantly.”
She further stressed the need for the government to pay attention to the percentage of deficit in its annual budgets, pointing out that for debt to be sustainable medium term, you must earn revenues.
“We should not have a budget of N17 trillion and N10 trillion of deficit, and out of that, new borrowing of N8.8 trillion, which is 50 per cent of your budget,” she stated.
