Next government to inherit N71.5tr debts, liabilities after May 29

• FG blames oil theft for massive borrowing

• Economists prescribe securitisation for flexible repayment, urge govt to pursue growth policies

• There is so much corruption in bureaucratic processes, says Utomi

Barely six months to the end of President Muhammadu Buhari’s administration, the Federal Government’s total debts and other financial liabilities have reached N71.46 trillion.

The figure does not include undocumented contingent liabilities to university lecturers, public school teachers and other public employees to whom government is indebted.

Analysts say these undocumented liabilities could run into several trillions. The figures also exclude other pending financial liabilities to non-lending bilateral and multilateral institutions. These include regional and global institutions the country subscribes to as a member.
 
While the traditional debt stock of the central government has ballooned from less than N10 trillion as at June 2015, a month into the current administration, to N35.7 trillion in June 2022, FG has revealed that its debt obligations to road contractors are about N11.16 trillion.
 
During a recent budget defence, the Minister of Works and Housing, Babatunde Fashola, said government is committed to highway contractors to the tune of about N10.4 trillion even as a total of about N765 billion relates to unpaid certificates for executed works.  
 
Of Nigeria’s documented N42.8 trillion sovereign debts as at June, FG’s obligation stood at N35.7 trillion. The amount does not include the controversial Central Bank of Nigeria (CBN)’s estimated N20 trillion overdraft extended to the Federal Government.
 
Besides, government’s “contingent liabilities” to different institutions and projects stood at N4.6 trillion at the close of last year. The figure is projected to reach N4.98 trillion by December and jump by as much as 50 per cent to N7.52 trillion next year when the current administration is billed to hand over.

The Guardian had reported that items and organisations on the contingent liability list are Nigeria Mortgage Refinance Company Plc, Nigeria Ports Authority – Lekki Deep Seaport, pension arrears, NNPC – AKK Gas Pipeline Project among others.

The liabilities, interestingly, do not capture dues to the Nigeria Union of Teachers (NUT), Academic Staff Union of Universities (ASUU) and several other labour groups.

Obligations relating to the country’s ongoing bilateral and multilateral financial commitments are also not captured. These categories, according to Prof. Godwin Owoh, an economist and debt management consultant, add to the country’s real debts.

Effectively, President Buhari’s administration will be passing well over N72 trillion in debt and contingencies to a new administration in May, next year. Other officially undocumented figures when added will push the sovereign debt towards N100 trillion.   

Apart from concerns about the cost of servicing the bloated CBN overdrafts, stakeholders are worried about government’s silence on how it intends to liquidate the supposed short-term facility.
 
Last year, the Debt Management Office (DMO) said the facility would be converted to a 30-year instrument. This was to be done in line with the debt management strategy of the administration, which leans towards long-term maturing.

The Minister of Finance, Budget and National Planning, Zainab Ahmed, followed up with confirmation of the securisation plan, but it drew a shocked reaction from experts who warned that the plan was alien to Ways and Means (W&M) management and runs foul of the CBN Act.

Section 38 of the CBN Act says the apex bank could extend overdrafts to the Federal Government to tackle a temporary shortfall in revenue. It, however, states that any outstanding overdraft shall not exceed five per cent of the previous year’s actual revenue of government.

It added that the amount lent should be repaid “as soon as possible” and that the power to extend the credit line shall not be exercisable subsequently, should the government fail in liability to repay at the end of the financial circle.

IMF had called on the apex bank to subject the facilities to the ambit of its enabling loan. Other experts have also called on CBN to liquidate the amount and call off the lifeline to rein in inflation, which has crossed the 20 per cent mark.

The Federal Government, at the weekend, blamed its penchant for borrowings on oil theft. This might not be unconnected to the recent advice given to government by DMO as regards massive borrowing.

DMO Director-General, Patience Oniha, at a workshop for Senators and House of Representatives on Thursday, said revenue growth should be accelerated and loans obtained should be invested in revenue-generating infrastructure to service debt. She also advised government to prioritise revenue generation other than increase borrowing.