Kemi Adeosun, minister of finance, says Nigerians need to tolerate more debts to allow the Muhammadu Buhari-led administration deliver on its plans for the country.
The minister made this statement on Sunday at a joint press conference with Godwin Emefiele, governor of the Central Bank of Nigeria, in Washington DC.
“Nigeria’s debt to GDP ratio is one of the lowest. We are at 19%, but most advanced countries have over 100%. I am not saying we need to move to 100%, but I am saying we need to tolerate a little more debt in the short-term to deliver the rails, the roads and power so as to generate economic activities, jobs, revenue, which would be used to pay back the debt,” she said.
“I assure you that this government is very prudent around debt. We don’t borrow recklessly and we have no intention of bequeathing unserviceable debts on Nigerians.”
Adeosun said the finance ministry and Debt Management Office (DMO) have been monitoring state governments to ensure that they don’t borrow more than they can service.
“Any state government has to come to us to get an approval to borrow. We perform debt sustainability analysis and if the repayment is more than 40 per cent of their revenue, we turn it down. So many people are talking of how many loans we are approving, they don’t talk about how many loans we are turning down,” she said.
“Many do not go through and we are constantly monitoring state governments to ensure that the debts that they take on is sustainable. The problem with some of the states that have debt problems are legacy issues that were there before they came in. But since, we came in, we have been very strict, trying to make sure states do not borrow more than they can service.”
TheCable had reported that 11 states lost large portions of the September 2017 federal account allocation committee (FAAC) disbursements to deductions.
These deductions include debt servicing payments and financial commitments to joint projects.