Truth
is, across all tiers of government, the situation is terrible. The
revelation about the parlous state of the economy, which government spin
doctors refused to admit all this while, is finally out in the open.
Who
else belled the cat, but the Minister of Finance and Coordinating
Minister for the Economy, Dr. Ngozi Okonjo-Iweala, who financial
pundits, observed, appeared to have come down from her high horse,
confirmed the rumour mill that the nation’s ship was sinking deeply into
debt these past years.
“We
have serious challenges. Things have been tough since the beginning of
the year and they are likely to remain so till the end of the year,” she
said.
With
crude sales accounting for more than 80 percent of government revenue,
Nigeria, Africa’s top economy and largest oil producer, has been
hammered by the 50 per cent fall in prices.
Okonjo-Iweala
said the federal government had a projected borrowing allowance for
2015 of N882 billion ($4.4 billion/4 billion euros).
But
N473billion has already been used up to meet recurrent expenditures,
including public worker salaries. “We have front-loaded the borrowing
programme to manage the cash crunch in the economy,” the minister told
reporters.
Okonjo-Iweala,
who continually stressed that this year would be particularly difficult
for Nigeria, economically, said the hardship occasioned by the drop in
crude prices, should serve as an incentive and a wake-up call to
diversify the economy, rather than a challenge.
While
Okonjo-Iweala said the severity of Nigeria’s cash crunch requires daily
management, the problem will almost certainly be off her desk in less
than a month. President-elect Muhammadu Buhari will be sworn in on May
29 and is not expected to retain any of the key ministers appointed by
outgoing President Goodluck Jonathan.
Like
the Federal Government, the states are also weary of the gloom that
stares them in the face. The APC governors had last Tuesday met with
President-elect, Major-General Muhammadu Buhari (retd) at the Defence
House, Abuja, to express their displeasure over the parlous state of the
economy.
The governors cried out that most state governments had gone bankrupt and, therefore, cannot pay workers’ salaries.
According
to them, it was obvious that they were going to inherit huge debts
which may delay speedy progress in their respective states. They were,
however, silent on APC states like Lagos, Edo and Osun, which are
currently the most indebted in the country.
Addressing
journalists after their indoor meeting with Buhari, chairman of APC
governors, Chief Rochas Okorocha of Imo State, said the outgoing
government had ruined the economy.
According
to him, the fact that the federal government has not paid April
salaries was an indication that the economy was not healthy.
Okorocha
said: “As it stands, most states of the federation have not been able
to pay salaries and even the federal government has not paid April
salary and that is very worrisome.
“By
May and June, the salary will be in cumulative of three months. With
the huge expectation from Nigerians and people who have voted us into
power, we wonder. We are hoping that the president-elect will do
whatever is humanly possible to bring about a bailout not only in the
states but the federal government, at least for people to get their
salaries and turn around the economy.”
Debt profile across the states
But what is the degree of Nigeria’s debt really? The devil as they say is in the detail.
Investigation by Ripples revealed that states across the federation are experiencing cash crunch crisis.
At
the last count, the debt burden of the 36 states of the federation as
well as the Federal Capital Territory is now at a whopping N12.06tn.
From
available records obtained from the website of the Debt Management
Office, Ripples discovered that the country’s public debt rose from
N10.16tn as of March 31, 2014 to N12.06tn as of March 31, 2015.
Paired
into specifics, the report revealed that the country’s indebtedness
rose by N1.9tn within a 12-month period, with the public debt put at
18.7 per cent.
A
cursory look at the total public debt showed that much of it (N8.51tn
as of March 31, 2015) was owed domestic creditors by the federal
government.
The
domestic debt of the government rose over a 12-month period, by N1.33tn
from the total N7.18tn recorded on March 31, 2014, which is an increase
of 18.52 per cent.
The domestic debt of the states rose from N1.55tn to N1.69tn within the same period.
Besides,
the external debts of both the federal and state governments rose
marginally from $9.17bn on March 31, 2014 to $9.46bn as of March 31,
2015.
A
breakdown of the domestic debt profile of the Federal Government by
instrument showed that FGN Bonds accounted for N5.37tn or 63.13 per cent
of the total.
The
Nigerian Treasury Bills, on the other hand, accounted for N2.87tn or
33.68 per cent of the federal government’s total domestic debt profile.
Nigeria
typically sets its crude oil benchmark price between 75 and 80 dollars,
and is supposed to deposit excess revenue in a savings account.
But
even when crude was selling above $100 last year, Jonathan’s
administration struggled to build savings. Critics say the excess crude
account has been repeatedly raided by powerful political actors, a
development that has left the country’s purse empty.
See below a table of the debt profile of states and the Federal governments
– Ali Smart
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