Debt Management Office cautions FG on reckless borrowing, calls for bold reforms

THE Debt Management Office (DMO) has issued a warning to the Federal government against additional borrowing, raising a concern that 73.5 per cent of this year’s revenue would be used to service debt.

The DMO, after analysing the nation’s 2022 debt situation, posited that the high debt service-to-revenue ratio was unsustainable and posed a threat to debt sustainability.

The Debt Office advised the Federal government to focus on increasing revenue generation to achieve a sustainable debt service-to-revenue ratio.

It suggested the Federal government should raise its revenue from N10.49 trillion to about N15.5 trillion.

DMO’s analysis, obtained by The ICIR, projected the total public debt-to-gross domestic product ratio to increase to 37.1 per cent in 2023, mainly due to new borrowings, Federal government’s Ways and Means at the CBN, and estimated promissory notes issuance.

The DMO also projected that Federal government’s debt service-to-revenue ratio of 73.5 per cent for 2023 would exceed the recommended threshold of 50 per cent due to low revenue.

In a further analysis, the DMO emphasized the importance of adhering to existing legislation on government borrowing, such as the Fiscal Responsibility Act 2007 and the Central Bank of Nigeria Act 2007, to moderate the growth rate of public debt.

It further called for a focus on revenue mobilisation initiatives and reforms to increase the country’s tax revenue to GDP ratio.

It also suggested encouraging private sector involvement in funding infrastructure projects through public-private partnerships (PPP), and reducing borrowing by privatisation or sale of government assets.

Every Nigerian is calculated to be owing N384,864 accumulated by former President, Muhammadu Buhari, who left  office in May 2023.



    The DMO had projected that government’s persistent borrowings would see former President,  Muhammadu Buhari, leave a humongous debt of N77 trillion behind for the incumbent Bola Ahmed Tinubu administration.

    Economic analysts said with the current foreign exchange unification, the debt would have appreciated to N82 trillion, while putting the economy into more pressure of repayment and debt servicing.

    “The government must pay attention to the ease of doing business and create a special purpose vehicle to open the economy through huge diaspora remittances.

    “The government at the federal and sub-national levels should also pay attention to transparency and procurement reforms to give investors confidence,” the Lead Director for Centre for Social Justice, Eze Onyekpere, told The ICIR.

    Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

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