The Minister of Finance and Co-ordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala has on Monday said that the Federal Government is adding $7.9billion to Nigeria‘s foreign debt stock between now and 2014.
Okonjo-Iweala revealed this before the House of Representatives Committee on Loans, Aids and Debts.
She said the country would be borrowing externally at an average of $3billion yearly, describing the loans as concessional ones.
With this development, Nigeria’s external debts would stand at $14.1billion in about two years from now.
While affirming that the country would continue to borrow at a reduced level, she stressed that people should forget about borrowing from the country’s foreign reserve.
She said Nigeria’s current external debt stands at $6.2billion, while domestic borrowing, as at the end of September, stood at N6.3 trillion.
On the oil benchmark for the 2013 budget, Okonjo-Iweala cautioned against politicising the issue.
She said: “I do not want to enter into discussion on the benchmark, but I do want to urge the honorable members to please bear with us because benchmark price is really something that is based on professional and technical work.
“It is not really a political matter, it is a technical issue and it is underpinned by a module like in many other countries. And I would really want to say that in Nigeria, we should not politicise the issue of benchmark.
“We should be professional and technical about it. In countries like Chile, for instance, they even have a committee of experts that determine their benchmark.
“Maybe at one stage, Nigeria may have to move in that direction, having a committee of experts that everybody trusts. It is whatever that committee produces that nobody argues about because they know it is based on technical work.
“So, I really want to urge you, I understand what you are trying to say, I think we are putting in place a plan to manage our debt and our fiscal deficit. It is a responsible plan, one seen as strong for the economy, but I think we should avoid situations that can create more uncertainties with the issue of benchmark.
Okonjo-Iweala explained that External Reserves to nations are regarded as savings that cannot be borrowed from, stressing that every country has to save this reserve.
“The lower you run the reserve the more the Naira will depreciate, so we must maintain a level of reserve and we believe that for our economy, we should push it to $50billion and $10billion of Excess Crude Account because of the uncertainties in the world,” she added.
Besides, she said the current debt profile put at 28.87 per cent of the country’s debt-to-Gross Domestic Product (GDP) is sustainable.
When the Committee questioned the rationale behind the aggressive borrowing after the country had taken the pains to exit its earlier debt burden, the Minister noted that though it was a tortuous process for the country to exit the Paris and London clubs of creditors, the country must continue to borrow.
She said, the various loans to be taken by the federal and state governments would be target- driven, adding, that the infrastructure and other needs of the country are substantial, and would gulp between $10billion to $14billion, equivalent of more than N1.5 trillion a year for the next three years.
“If we take that from our budget, it means the totality if our capital budget. What I want us to understand is that we are not alone in this as needs are increasing daily.
“This is why nations, sometimes try to mix the budgetary resources they have with some borrowings that are productive. And that is what we need to focus on- keep the borrowing limited and whatever is borrowed must yield result,” she stated.