Last year’s (2020) devaluation of the Naira increased the nation’s total debt profile by about N1 trillion.
Dr Paul Alaje, Senior Economist with SPM Professionals disclosed this at the virtual Annual Forum of Finance Correspondents Association of Nigeria (FICAN) at the weekend.
His words, “Devaluation happened last year from ₦306 official figure to ₦379 according to CBN, now, when you study debt management publication carefully, you will see that because of devaluation, Nigeria has added ₦1 trillion to debt for borrowing nothing
“Looking at the foreign component of Nigeria’s debt and the conversion to Naira, Nigeria devalued and borrowed in dollars that its self will make our debt profile to increase,” he said.
“Interestingly, Nigeria will still service this debt at the same dollar rate it borrowed the money because the rate of servicing has not reduced.”
He noted that while debt has been growing, there has not a corresponding growth in revenue generation and urged the federal government to pay more attention to effective revenue generation, adding, until we are able to do that, “we can’t continue to compare ourselves with a large economy that have the capacity to generate revenue.”
For Nigeria to generate needed revenue, governments at both state and federal levels he said should plug leakages and think of new ideas of generating revenue other than the traditional ways.
The economist advised the government to moderate commercial borrowings which would always increase in value and usually not forgiven.
“Who will forgive us of euro bonds? These are commercial loans, unlike the one we have with Paris club and some other international organization” he said.
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