Constant Borrowing, Promissory Notes Responsible For Rise In National Debt, Reveals DMO Chief

The Director-General of the Debt Management Office (DMO), Patience Oniha, has revealed that the constant borrowing and promissory notes alongside the budget deficit is the reason for the increase in public debt.

Oniha addressed the national debt on Wednesday during her appearance on a TV program called Sunrise Daily, where she admitted being "concerned" about the debt situation of the country.

"I should say very clearly that I am concerned," she said, Punch reported. "These days, I am more of a revenue advocate. As I said, total public debt to GDP is about the lowest in Africa. Countries like Kenya and Angola have over 60%."

She gave an example of other countries like the United States, the United Kingdom and Germany, noting that they have over 100% debt to GDP, and still their people aren't worried because "there is revenue to support it."

The director general of DMO explained that the debt stock in Nigeria is growing because the country has been running on a budget deficit for many years, while adding the nation has been borrowing not only in bad times but also good times.

"We have been running budget deficits, and those deficits are funded, 85 to 95%, from borrowing," she continued. "The other aspect, we have contracted several loans in the past and disbursements are going on, which add to it."

"These are publicly available data," she said. "As we borrow each year, it adds up. So, the annual budget deficits are a major component. If you look at this year's budget, the budget size is N21 trillion, borrowing is N10 trillion."

Oniha revealed that the third factor increasing the debt is the promissory notes issued by the government to "settle obligations, for which it doesn't really have the revenue or cash." She added this was why debt stock has been growing.

She further advised the government to work on reducing its expenses and boosting its revenue.

The DMO disclosed last month that the total public debt of Nigeria, which consists of domestic and external debt stocks of the federal government and subnational governments, has reached N46.25 trillion in the fourth quarter (Q4) of 2022.

The debt stock was N39.56 trillion in 2021, and has now increased by N6.69 trillion. There has been an increase of almost N2 trillion, in comparison to the third quarter of 2022, which was N44.6 trillion.

According to multiple sources, Zainab Ahmed, who serves as Federal Minister of Finance, Budget and Planning of Nigeria, said last year that the government would borrow more in order to finance the budget deficit in 2023.

Aside from borrowing, Nigeria is also going through a major economic crisis since demonetization, which mopped over 70% of the liquid money in the country.