According to the statement made by Kemi Adeosun, at least 77% of the overall debt of Nigeria that amounts to more than N19 trillion came from the domestic market. This is alarming since it can reduce the availability of the funds for the private sectors. The statement was made during a meeting of the Senate committee regarding the Nigerian Debts and the loan requests made by the executive branch which was quickly picked up by the different Online News Nigeria. On a later period, President Buhari instructed the National Assembly to approve the 3 billion bonds to refinance the domestic debts and another 2.5 billion to finance the major component of this year’s budget.
The Importance and Validity of the Loan Requests According to Online News Nigeria
Adeosun, Minister of finance, has defended the validity of the loan request. She said that there is absolutely no need to decrease the domestic debt of the government and free banks that significantly invested on FGN Bonds and Treasury Bills. Online News Nigeria reports that if the government has become increasingly present in the local market that can signify that the administration has been receiving the money that should be assigned to the private sector.
On the other hand, if the government has become less visible, there should be enough money for the banks to loan for the private sector. This will greatly boost the economy of the country. Online News Nigeria also showed a breakdown of the local debts and at least N3.7 trillion has been allotted to the Treasury Bills.
The Increasing Concern towards the Domestic Debts
Furthermore, Adeosun also highlighted the fact that domestic debts can also be expensive. The average interest rate of 16% and they also have a fairly short maturity time. As a response to the queries of the legislators, Adeosun said that the maturity time of the proposed loan has yet to be determined, but the expected range would be from 5-30 years. Based on the other Online News Nigeria, the loans come with varying tenures.
Adeosun is also aware of the increasing concern of the Nigerian people about the piling up of debts that can be inherited by the next Nigerian generations. However, she stated the fact that the government is borrowing a long-term loan and they can use that to fund the principal capital of the country that allows them to reap the benefits of the loan in a long-term period. Online News Nigeria reported that she refused to comment when she was asked by the Committee if the recovered money of the government will be used to settle a portion of the domestic debts. However, she assured everyone that any revenue that the government will make will be used with caution.
Other personalities present in the meeting of the Senate committee also defended the funding of the project using external loans. According to the Online News Nigeria, the financing of the Nigerian Debt will be restructured slowly to favour the foreign finances that will de-emphasize the domestic finance. This should prevent the possibility of ‘crowding out’ and stimulate the private sector as a key to the growth of the economy.