Nigeria’s total public debt stock rose continuously from NGN8.32 trillion in September 2013 to NGN22.7 trillion in March 2017. The high debt made the World Bank and the International Monetary Fund (IMF) warn the country of the economic consequences of such huge debt. Even the Nigerian DMO warned that Nigeria’s high debt service to revenue ratio could trigger a debt crisis. The
Minister of Finance, however, described the situation as an “emotive issue” and made a strong and persuasive case for more foreign loans to ramp up the country’s stock of infrastructure. While economists believe that borrowing is healthy for the economy and may help to maintain economic growth and development, the 172% leap within five years is worrisome. More worrisome still is the lack of evidence that the borrowed funds are being properly utilised. These situations undoubtedly may have negative implications for human development that is already in a deplorable condition in the country as the revenues that should have been used for human development will now be channelled to debt servicing and payback. It is therefore recommended that: the tax system in the country should be made effective to increase revenue generation; a high proportion of the government debt within the 2018/2019 fiscal years should be external; the federal government should borrow only to finance capital projects that will over time, generate enough returns to pay off the debt. Also, the government should adopt alternative financing measures such as public private partnerships, and above all, the Federal Government should comply with the Fiscal Responsibility Act requirements in borrowing.
