The former Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, has said the public debts remain sustainable as the country has adequate capacity to repay its debts.
While speaking at her valedictory ceremony in Abuja, Ahmed said, “Despite revenue challenges, government consistently met its debt service commitments, while post-financing assessments showed adequate capacity to repay loans.”
However, speaking at the launch of the World Bank’s Nigeria Development Update titled, ‘The urgency for business unusual’, the finance minister admitted that Nigeria struggled to service its debt.
She said, “Already, we are struggling with being able to service debt because even though revenue is increasing, the expenditure has been increasing at a much higher rate, so it is a very difficult situation.”
Also, in the ‘Macro poverty outlook for Nigeria: April 2023’ brief, the World Bank said Nigeria’s constant fiscal deficit worsened the nation’s public debt stock, with 96.3 per cent of government revenue spent on servicing debt in 2022.
In a different report, the Washington-based bank projected that debt servicing would gulp 123.4 per cent of the Federal Government’s revenue in 2023.
In her farewell speech, the finance minister said that the past eight years had been eventful and defined by the impact of two recessions due to the 2016 oil price collapse and the 2020 COVID-19 pandemic.
Despite these challenges, she noted that swift monetary and fiscal responses were critical to the economy’s prompt recovery.
Highlighting what the ministry did in the last eight years, Ahmed said she superintended over the implementation of “far-reaching measures to contain the adverse impact of the pandemic on citizens, as well as to resuscitate the economy.”
The government, she said, deployed “various fiscal instruments, such as tax relief measures, to alleviate the burden on businesses and vulnerable households”.
She said the incoming finance minister must think innovatively to address the economic challenges he or she will inherit.
Economic diversification, she noted, “Remained a key priority for Nigeria. Consequently, our development plans encompassed initiatives for developing supportive infrastructure and reforms aimed at reducing dependency on oil, alleviating inequality and unemployment, establishing robust and effective institutions, and addressing governance issues.”