THE Federal Government has reacted to concerns raised by Atiku Abubakar, former Vice President over the growing debt profile of the country, insisting that the loans were for building infrastructure and implementing long-lasting projects.
The former Vice President had on Tuesday written that the growing debt profile was an indication that the country was in a crisis.
But in a reaction, Lai Mohammed, Minister of Information and Culture explained that the loans being obtained by the current administration were being primarily used to finance infrastructure projects as opposed to ‘servicing the crass indulgence of a few fat cats’ – a reality he said was obtainable in the past administration.
“We have said that in the face of massive infrastructural decay, no responsible government will sit by and do nothing,” Mohammed said in a statement on Wednesday.
“This Administration’s borrowing, therefore, is aimed mostly at revamping our infrastructure. The loans for the educational sector will contribute to the development of our human capital while the loans for the agricultural sector will help the move to diversify the economy.”
Mohammed said the figure of Nigeria’s debt to revenue ratio of 99 percent in the first quarter of 2020, quoted by the former Vice President, is not in the Medium-Term Expenditure Framework and Fiscal Strategy Paper, where he stated he got it from.
”We are also not able to ascertain the source of the first quarter figures of N943.12 billion for debt servicing and N950.56 billion for retained revenue, which he also quoted,” he said.
Adding that the debt service provisions in the annual budgets include principal repayments, interest payments and all other applicable charges.
“Therefore, the statement that debt servicing does not equate to debt repayment is not only wrong, but ill-informed,” the Information Minister said.
He also disclosed that the Federal Government has taken several steps to shore up revenue, explaining that the reason for increased debt to revenue ratio is tied to poor revenue generation.
”One of the reasons why debt service to revenue is high is because revenue generation in Nigeria has been low, with over-dependence on the oil sector. This is corroborated by the fact that the ratio of Nigeria’s tax revenue to GDP is one of the lowest in the world at about 6%,” the Minister said.
He however listed that the current administration has introduced several measures to shore up revenues, including passage and implementation of the Finance Act, 2019, various on-going reforms in the oil and gas, tax administration and collections, as well as the strategic revenue growth initiatives.