James Emejo

Edo accounted for 6.57 per cent of external loans at $279.02 million; Kaduna, 5.48 per cent or $232.96 million; Cross River, 4.56 per cent or $193.79 million and Bauchi, 3.18 per cent or $134.90 million.

The foreign debt profile of Bayelsa, Benue and Borno stood at $57.25 million, $34.75 million and $22.29 million respectively.

According to the Debt Management Office (DMO), the country’s first loan from the Paris Club of creditor nations was US$13.1 million loan taken from the Italian government in 1964 for the building of the Niger Dam.

Subsequently, from that time till the end of the decade, Nigeria’s borrowing from foreign lenders was generally insignificant.

“However, the oil boom of 1971-1981 introduced the era of big borrowing in Nigeria. Loans were acquired by various tiers of government as Nigeria embarked on major development and reconstruction projects in the wake of the civil war.

“The borrowing continued well into the civilian era, as the federal government embarked on the guaranteeing of many unviable loans taken by private banks, state governments and parastatals.

“In 1982, when oil prices crashed, Nigeria was unable to pay off the loans, it borrowed. Interest payments spiked, penalties rose, the crisis had begun.

“This pattern continued well into the military regimes of 1985-1993 and 1993-1998, when Nigeria stopped paying its debts to the Paris Club altogether, after the Paris Club refused to substantially reduce Nigeria’s debt.

“With the return to civilian rule in 1999, Nigeria embarked on a relentless campaign for debt relief. Nigeria’s debt, which stood at US$36 billion in December 2004 was unsustainable, President Obasanjo campaigned.

“Nigeria spends more on interest payments than it does health care and education. Given this debt level, Nigeria cannot achieve the Millennium Development Goals,” said DMO.

Nevertheless, the debt relief campaign finally paid off on June 29, 2005, when the Paris Club and the administration of Obasanjo with the efforts of then Minister of Finance, Dr. Ngozi Okonjo-Iweala, agreed on an $18 billion debt relief package,” DMO explained

Nigeria’s total domestic and foreign debt stocks as at June 30, 2017 stood at about $15.1 billion and N14.1 trillion respectively, according to NBS.

Foreign debt rose from $10.71 billion in 2015 under the immediate past administration to $11.406 billion in 2016 and $15.047 billion in 2017 and now $22.08 billion under President Buhari’s government.

There has been increasing worry by commentators over the rising external borrowing especially in view of the Paris Club relief.

This is particularly because rather than use borrowed funds for the purpose for which they were secured, politicians misappropriate the resources to satisfy their selfish desire.

A couple of former governors have recently been imprisoned over such misapplication of public funds for personal gains, while in office as others are still being investigated.

The failure to commit these funds to developmental objectives has continued to impoverish the people as well as cause great setback in efforts to reduce poverty and inequality in the country.

Although prices of oil are currently rising at the international market, there are concerns that the reversal of the rising fortunes of the oil, which is the major revenue earner, portends danger for the economy. Analysts fear that with the increasing level of debt the country may be back in recession, if oil prices start falling and a downward streak is maintained.

Besides, going by BudgIT’s exposition on the state of fiscal health of all the states of the federation, it could be summarised that the reluctance or inability to pursue true diversification of the economy, away from the current lip-service attached to it and reliance on oil receipts for survival could prove to be costly going forward.

The report, ‘State of States’, had listed Rivers, Bayelsa, Delta, Akwa Ibom, Lagos, Edo and Ondo as the only states which are currently fiscally sustainable, largely because of their robust revenue profile and manageable recurrent expenditure obligation.

However, states like Osun, Ekiti and Cross River were adjudged as being in a precarious economic situation.

Little wonder why states, including Benue, Osun, Ekiti, Kogi, etc., have not been able to pay workers’ salaries for months, as well as not meeting their contractual commitment to contractors amongst others.

According to BudgIT, a civil research group, some of the reasons that could be tied to the pitiable condition of states’ fiscal reality include the indiscriminate accumulation of both domestic and external debts over the