Okonjo-Iweala warns incoming Governors against debt acquisition

Director General of the World Trade Organisation (WTO), Dr. (Mrs) Ngozi Okonjo Iweala has warned incoming State Governors against acquisition of debt.

Okonjo-Iweala gave the charge in Abuja on Monday during the opening of the 2023 induction for Re-elected and elected Governors with the theme: ‘Governing for Impact (Building Sub-national Governance), organised by the Nigeria Governors Forum (NGF).

According to Debt Management Office (DMO) in its Q4 report of 2022 fiscal year, Nigeria’s total domestic debt stock was N27.55 trillion, while external debt stock was N18.70 trillion (US$41.69 billion).

She said: “We have challenges on the fiscal, debt, and monetary policy fronts.

“Nigeria’s gross debt level has climbed from N19.3 trillion in 2015 to $N91.6 trillion in 2023. The debt-to-GDP ratio has almost doubled from 20% to 39% over that time period.

“While the debt-to-GDP ratio may not look so alarming, as revenues decline, the burden of debt servicing has increased dramatically. The debt service to revenue ratio is certainly alarming, at 83.2% in 2021 and 96.3% in 2022, according to the World Bank.

“This means that at the federal level, after servicing our debt there is little room to pay for recurrent expenditures, let alone investment. The fiscal deficit of 5.3% of GDP is higher than our agreed fiscal rule of 3% of GDP. This has to be carefully monitored and brought down. Dealing with the fiscal deficit will of course be infinitely more difficult with an oil subsidy bill of N3.36 trillion for the first half of 2023 (or N6.72 trillion if it is not removed).

“The deficit is made worse by revenue losses from oil theft. The difficulties around this issue underscore the importance of political consensus – whether you are in government or in the opposition – on policies critical for nation-building”, she counselled.