Why Nigeria’s having debt problem — DMO DG

General Managers Debt Management Office (DMO), Patience Oniha, has identified Nigeria’s inability to meet the OPEC daily production quota as one of the reasons for the debt challenge the country is experiencing.

Mrs. Oniha stated this on Monday in Abuja when she appeared before the House of Representatives Committee on Aid, Loan and Debt Management.

The chairman of the commission, Ahmed Safana, expressed surprise at the growing profile of the nation’s debt.

He asked the DMO to explain why there is a huge increase in internal and external debt.

Safana said the nation’s debt profile increased by N1 trillion in the past year.

According to the DMO, as of June 2022, the total public debt of the federation was 103.3 billion dollars.

Responding, Mrs. Oniha said that if Nigeria had taken advantage of the recent crude oil price hike, the nation would not be in the current debt situation.

“If all we did was to produce our quota of crude oil, we would be surplus; the price of oil doubled the budgeted price,” Ms. Oniha said.

Despite OPEC agreeing to a quota of 1.83 billion barrels per day, Nigeria has repeatedly failed to meet its quota due to oil theft and pipeline vandalism.

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The DG also frowned on the government’s inability to raise revenue to embark on big budgets.

He stated that the country needs to review its income and expenditure in order to deal with the rising debt profile.

“It’s also possible to start looking at spending, if you can’t afford it, or can only afford it through large loans, you might have to reconsider. I agree with you (legislators) that the size of our budget is small, relative to our GDP,” he said.

Mrs. Oniha also informed the members of parliament that the Eurobond is not an option due to the global uncertainty due to the war between Russia and Ukraine.

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He said most creditors are focusing on the US and other AA rate markets.

He stated that these investors have a limit in terms of the risk they can take.

“Before going to Eurobonds and raising funds, we don’t know when the world would recover. Already, the UK is talking about recession and we don’t know who else. I think it’s strategic for us, as a nation, beyond the DMO, we have to look for revenue,” he said.

He added that in Africa only Nigeria and Egypt have recently issued Eurobonds, adding that no other country on the continent has been able to raise money from Eurobonds.

Last month, President Muhammadu Buhari presented the N20.51 trillion budget for 2023 at a joint session of the National Assembly. The proposed budget has a deficit of N10.78 billion.