Okonjo-Iweala: Jonathan Incurred $21bn of $63bn National Debts
Says wage increase caused huge debt profile Danjuma wants Buhari to probe Jonathan's regime
Coordinating Minister for the Economy (CME) and Minister of Finance, Dr. Ngozi Okonjo-Iweala, yesterday put the nation’s total debt stock at $63.7 billion, which encompasses multilateral as well as domestic loans by successive federal and state governments since 1960. She said that of this figure, $21.8 billion was incurred under the outgoing government of President Goodluck Jonathan.
Her disclosure is coming on the heels of remarks by Vice President-elect Yemi Osinbajo that the outgoing administration of President Jonathan will be leaving a huge debt of $60 billion for the incoming administration of Muhammadu Buhari.
Speaking during an interactive session with finance correspondents in Abuja yesterday, she said said it was wrong to blame
the Jonathan administration for the huge debt stock which she said was accumulated over a long period of time by several administrations.
Giving insight into the $21.8 billion debts incurred under the Jonathan government the minister said the debts were made up of $18 billion domestic component and $3.7 billion external component.
According to her between 2007 and 2011, a debt of $17.3 billion was recorded while between 2012 and 2015, the debt incurred stood at $18.1 billion.
She explained that the leap in the debt profile between 2012 and 2015 was triggered off by the 53 per cent wage increase implemented by the late Umaru Yar’Adua administration in a fell swoop.
This, she said, skyrocketed government’s borrowing from N524 billion to over N1 trillion in order to meet the salary increase, adding that the country’s domestic debt increased by $18.1 billion mainly because of the 53 per cent increase in the pay of civil and public servants.
The minister stated that at the time of the salary increase, she was still with the World Bank, adding that she had written and warned on the consequences of acquiescing to such a huge increase.
Absolving the Jonathan administration of blame, the minister said the government had in deed taken a careful and meticulous approach to managing the nation’s debt, noting that the present administration, for the first time in the nation’s history, retired a domestic debt of N75 billion in 2013.
Commenting on the $63.7 billion debt stock, the minister said $9.7 billion or 15 per cent is external while $54 billion or 85 per cent represents domestic debt. She added that the states’ share of the $9.7 billion external debt is 33 per cent while the states’ share of the $54 billion is 20 per cent.
Okonjo-Iweala pointed out that Nigeria still has one of the lowest fiscal deficits in the world with debt to GDP ratio of about 1.5 per cent of the budget, adding that the government has used the right tools to manage the economy and has only borrowed at very low concessionary rates to fund important infrastructure initiatives in agriculture, aviation, power, roads, health, and water resources, among others.
The minister added that where the country should watch carefully is the debt service to revenue, which is at 22 per cent.
She argued that it was wrong to “to characterise the Jonathan administration as leaving $63 billion debt since the country’s debt stock was accumulated over a long time by several administrations.
Commenting on the lingering fuel scarcity, the minister said most of the marketers were blackmailing the government and by extension, Nigerians.
According to her, Nigerians should rise up and ask questions why the marketers reneged on their promise a fortnight ago after they openly told the entire country that they had sorted out their differences with the government and that they were going to end the scarcity.
She said soon after that open declaration, the marketers went back and shut down their supply chains, noting that they had requested her to sign that government was going to pay them N159 billion as foreign exchange differentials out of the N200 billion claims they were making.
The Finance Minister stated that the marketers, who had earlier agreed with the setting up of an ad hoc committee made up of their representatives, those of Petroleum Product Pricing Regulatory Agency (PPPRA), Debt Management Office (DMO), and Central Bank of Nigeria (CBN) to verify their claims suddenly backed out.
According to her, she could not sign off monies that she would find difficult to explain to Nigerians later, urging the populace to rise up and challenge the marketers.
While applauding some marketers that have demonstrated patriotic disposition to this current crisis, the minister noted that many marketers had resorted to black market operations and had kept on fleecing Nigerians and smiling to the bank.
The minister, who said she had no regrets serving Nigeria, noted that it was a privilege serving one’s fatherland .
According to her, in spite of personal attacks on her from some quarters, she has no regrets as her service to the country has been guided by utmost patriotism and altruism.
She noted that the records of service were there for all to see, adding that a 50 per cent fall in oil revenue did not amount to mismanagement of the economy as this was not caused by the government.
The Jonathan administration, she said, was leaving “positive economic legacies behind which nobody can wish away because history cannot be rewritten”.
Such legacies, she said, include 1.4 million jobs created yearly out of 1.8 million jobs required as confirmed by the National Bureau of Statistics; the Development Bank of Nigeria which she added, will make affordable loans of up to 10 years available to Nigerian businesses. The list, according to her include the Nigerian Mortgage Refinance Company which is spearheading a range of reforms which will vastly increase the number of mortgages in the country and 3600 Nigerians that were given multi million naira grants to finance their business and the 22000 direct jobs created and over 80,000 indirect jobs thru YOUWIN, among others.
Meanwhile, a former Minister of Defence, General Theophilous Danjuma has tasked the President-elect General Muhammadu Buhari to probe President Goodluck Jonathan and his administration's alleged gross mismanagement of resources which he said has left the nation indebted to the tune of over $60 billion.
Danjuma, who spoke in Takum, Taraba State during the official commissioning of two set of bridges he constructed along Takum-Katsina highway yesterday, said it has become imperative for the incoming administration to probe the outgoing administration if the menace of corruption would be curbed in the country.
Danjuma said, "It is disheartening to know that the incoming government of Buhari will have to contend with a debt of over $60 billion and there is nothing to show for this huge debt. Well, we would know what happened to these monies because I believe that the Buhari administration has to, and should, in national interest, investigate the administration so that we would know what happened".
Giving reasons why he chose to not to participate in politics, Danjuma stated that he chose to steer clear of politics because for him, "all the political parties are the same, very bad and so I rather steer clear of it. I support anyone who comes to me for money based on what I make of their person irrespective of political affiliations."
Meanwhile, ahead of Friday’s transition to a new government, economic analysts have stated that one of the major issues President-elect Buhari and his team will grapple with is the mixed corporate earnings performance of quoted companies and the conflicting macroeconomic signals which leave investors at sea regarding market direction and appropriate investment decisions.
After the breath-taking rally in the Nigerian financial market post-2015 Presidential polls, markets recently bucked the trend, defying analysts' expectation of a strong rebound post elections.
Data collated by the financial and investment advisory firm, Afrinvest, at the weekend showed that the NSE All Share index, from a YTD high of 3.1 per cent (35,728.12) post presidential election closed the week on a YTD return of -0.8 per cet (34,388.12).
The Afrinvest’s report noted that trading activities in the fixed income space has followed a similar pattern, bucking a strong rally postelections - following renewed foreign investor appetite - to a sideways trading pattern over the past weeks.
It said the development in the markets reflects the mixed corporate earnings performance of quoted companies and the conflicting macroeconomic signals which leave investors at sea regarding market direction and appropriate investment decisions. Headwind factors of rising consumer prices, fiscal austerity and consequent weaker consumer spending powers, as well as uncertain fiscal direction of political transition have veiled the improving dynamics in the polity and commodity prices.
In its weekly report, a copy of which was made available to our correspondent at the weekend, Afrinvest reports that the global monetary landscape remains broadly accommodating while the domestic monetary landscape has also recorded some gains with the naira remaining stable while external reserves haemorrhage is being gradually contained.”
Analysts from the company expressed the confidence that economy would bounce back once the incoming administration makes the direction of its economic policy known as Nigerian and foreign investors are currently adopting a wait-and-see attitude.
The report said, “We imagine that the modulation the markets await is a successful transition to a new government come May 29th and more importantly, a stable fiscal environment which is consequent on the policy pronouncements of the incoming government. Whilst the risk factors (headwinds) are evident, recent positive signals (tailwinds) as noted above posit a short to medium term attractive valuations for securities.”