Nigeria Uses 80% Of Revenues To Service Debts —IDB

•Total debts stand at $60bn —Senator Sani
THE Islamic Development Bank (IDB), on Tuesday, said Nigeria ranked among the countries using the largest percentage of its revenue to service foreign debts.
Country Representative of the IDB in Nigeria, Mumammed Kiliaki, who stated this during an interaction with the Senate Committee on Local and Foreign Debts, headed by Senator Shehu Sani, said the development was responsible for the attendant bleeding of the economy.
Also on Tuesday, Senator Sani said Nigeria’s total debts stood at $60 billion.



The debts are owed by the federal and state governments.
The IDB Resident Representative said though Nigeria’s debts to GDP ratio is low at 17 per cent, the resources being used to pay the debts were enormous.
He stated that for Nigeria not to get itself suffocated by such huge debt servicing profile, there was the urgent need for the country to expand the scope of its resources through diversification of the economy.

“My visit is very crucial because we need to look at the debt profile of a country before we give it new contractual sort of financing.
“We also work closely with the International Monetary Fund and the World Bank to ensure that our financing has the required threshold of grant financing, which is normally 35 per cent but, at the same time, there were financing that is not a burden to a country to the extent that the debt may not be sustainable.

“When you look at the debt/GDP ratio of Nigeria, it is very low. It is 17 per cent compared to Italy and other countries which is about 150 per cent, while that of the United States is about 100 per cent.
“But there is a caveat, it is true that debt to GDP ratio is low, but when you look at the amount, the revenue to debt servicing ratio, the amount of money that the government is collecting, the revenue of the government vis a vis the ratio to the total debt, I think Nigeria pays about 75 to 80 per cent of its revenue to service debt. This is very, very high compared to other countries where they use just 10 per cent,” he said.

He also clarified that the recent visit of the 19 northern state governors to the head office of the Bank in Jeddah, Saudi Arabia, for rehabilitation assistance for the internally displaced persons (IDPs) in north-eastern states had no financing envelope agreement yet, being a sensitisation move.
According to him, even if the governors had approached the bank for definite financial assistance, there was no way the Federal Government would not be carried along.
Senator Sani, in his remarks, asked the IDB and other multilateral financial institutions to stop propping the country into taking more loans on account of its low ratio of debts servicing to GDP, adding that what is 17 per cent today, if needed control measures are not applied, may go up to 77 per cent and invariably return the country to the pre-2006 era.

He told the IDB representative to be practically involved in Nigeria’s effort at economic diversification, adding that henceforth, his committee would monitor every cent, dollar and even kobo the government borrows.
Tribune.