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Commission concern at ballooning debt

06 September 2013, 09:54

Lagos - The Fiscal Responsibility Commission (FRC) raised concern at the growth of the national debt.

The commission said the debts were unsustainable and thus measures should be taken to reduce them and enhance the growth of the Gross Domestic Product (GDP.

“The Federal Government owes 111.63 per cent of its statutory revenue. In terms of debt to GDP ratio, the Federal Government debt stock is about 14.5 per cent. The national debt of N8.29 trillion is, however, about 22.1 per cent of the GDP. This is higher than the publicised figure of 17.5 per cent. At present, Nigeria's GDP is growing at 7.45 per cent. The stock of debt is growing at approximately 23.75 per cent, while debt service is growing at 26.81 per cent,” FRC stated.

“In a situation in which the growth rates of debt and debt service outstrip the growth rates of revenue and GDP, it is safe to say that debt is hardly sustainable, unless the rates of growth and GDP are stepped up and the rate of borrowing is reduced or held constant.”

The FRC said the debt profile included external debts; money borrowed from banks and the capital market, but excluded debts owed to contractors, which could not be ascertained.

(FRC) said nine of the 36 states of the federation are searing under huge debt weight.

Bayelsa, Cross Rivers, Ebonyi, Edo, Ekiti, Kaduna, Kwara, Lagos and Ondo are highly in debt, FRC said.

According to FRC report, the total indebtedness of each of the states was beyond limits set by the Debt Management Office (DMO).

 – CAJ News


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