By Elizabeth Chukwuma
It is not yet Eldorado for the Nigerian economy as President Bola Ahmed Tnubu, appears to have followed the footsteps of former President Muhammadu Buhari, who sold Nigeria in the International Finance market, to resort to domestic and foreign borrowing to run the affairs of the government, thus increasing the nation’s debt burden.
Olayemi Michael Cardoso, a former Commissioner for Economic and Budget, during Tinubu’s Administration a governor of Lagos state and now governor of Central Bank of Nigeria, CBN, who have been managing the country’s debt by servicing the creditor nations , London and Paris Club and other Multilateral Financial institutions may no longer finding it funny. This is because of the pressure from the foreign creditors who are following the Nigerian Government bumper to bumper to ensure that they will not default in the debt repayment plan.
At present the country’s foreign debt which is put at about the North American country of the United States, US, $51 billion is till going up as the current Tinubu’s Administration was said to have continued to borrow. This is evident with the borrowing of an additional N8 billion and €100 million, as part of the 2022-204, borrowing plan of the government.
The DMO , had reported that as at June 2022, barely one month after former President Buhari left office, the country’s foreign debt burden which was US$43.2 billion while the domestic debt was N54.1 trillion. But the country’s cumulative debt , both foreign and local, according to CBN, sources had hitthe N130 trillion mark and still going up.
Much of the foreign debts was aid to have been owed the African Development Bank, AfDB, under the close watch of Akinwumi Adesina, a former minister of Agriculture and Rural Development during Goodluck Jonathan’s Adminstration and the World Bank Group, which includes the International Monetary Funds, IMF, and its associated interests with the sum of US$1 billion and US$2 billion respectively.
There are indications that this 2024, fiscal year, the Nigerian government has planned to borrow N8.2 trillion, N10 trillion in 2025 and N11 trillion in 2026, to run the government, thus returning the country to the Buhari era. At present the Nigerian government had secured US$4.95 billion from the World Bank Group over the rising external debts servicing costs of the country.
The World Bank was said to have disbursed a total of US$4.5 million to the National Identy Management Commission ,IMC, under the digital Identification for Development, project. The CBN had said that Nigerian was able to secure the funding with the passoing into Law of the Nigeria Protection Act in June 20233The Value News online Magazine was informed that that the release of the funds for the multi-million dolaar project comprises a combination of ‘’loans, grants. Predicated on the institutionalization of data protection
The apex bank had confirmed that the fund was disbursed in multiple tranches between December 2021 and April 2024 with the disbursement of US$107.3 million and the disbursement is still ongoing. The project total cost of the entire project is put at US$430 million.
In apparent reaction to Nigerians’ worries about the stark decline of the nation’s foreign reserves from US$34.45 billion in March 18, 2024 to US$32.29 billion as at April 15, 2024, showing a drop of US$2.16 billion in 29 days , may have forced Cardoso, the CBN, governor , to speak out at the ongoing IMF Spring meeting held in Washington DC, Capital of the US, on Wednesday, June 19, 2024.
The argument in both official and unofficial circles was that the country’s foreign reserves was used by the Federal Government to stabilize the naira in the Autonomous Foreign Exchange Market, AFEM. The CBN, governor who could not take it had aid that ‘’the nation’s foreign reserves was used to settle debts owed international Creditors like the Mlti-lateral Financial Institutions: World Bank Group and IMF, AfDB, London and Paris Club and other obligations to the expenditure on the ordinary course of business as seen in other parts of the world.
He may have shocked Nigerians when he revealed in the latest monthly report of the bank that the Nigerian Government spent a total of US $15.55 billion on foreign debt servicing between 2019 and 2014, an interval of five years. He had said that in 2019, the government of the then President Buhari had spent US $588.33 million in debt servicing between January and May while the payment for 2020 was US$5.40 billion. The CBN governor who had continued his exposure had further revealed that in 2021, the amount paid the Creditors by the Buhari’s Administration was US$2.02 bn, US$2.34 bn in 2022 and US$3.43bn in 2023. Between January and May 2024, the Tinubu’s government, according to the governor has paid US %2.18bn in debt servicing.
He was said to have made clear to participant at the IMF Spring meeting in US, that ‘’there were no intentions by the Tinubu’s Administration to defend the naira with the country’s external reserves, describing it as counterproductive.
The Nigerian apaex bank governor who could not hide his feelings at the IMF Spring Meeting had said that the nation’s foreign reserves decline marks remains the lowest in six years, describing ‘’it as a decisive end to the period of steady accrual, during which the reserves witnessed a 3 –day surge , accruing US$1.28 billion between February5, 2024, and March 18, 2024’’.
While the Nigerian Government is spending so much of the country’s oil revenues to service its domestic and external debt, Dele Alake, minister of Solid Mineral Development says the solid mineral Development ministry’’ National Gold Purchase Programme’’ will go a long way to increase the nation’s foreign reserve and boost the naira’s value in the foreign exchange market.
The minister who had said that the first transaction of the refined gold which was made to meet the London Bullion Market Association Good Delivery Standard has delivered a US $5 million increase in Nigeria’s foreign reserve assets ,. 70+Kg of gold refined to the London Bullion Market Good Delivery \Standard and successful aggregation of locally mined gold thereby injecting about N6 billion into the Zamfara state rural economy and other parts of Nigeria where there are huge gold deposits in Commercial quantities.
Informed sources had told the Value News that only gold and silver bars that meet the ministry ‘s Solid Minerals Development Fund, Good Delivery standards are acceptable in the settlement of a loco London contract , where the bullion traded is physically held in London.
An elated President Tinubu, had commended officials of the ministry of Solid Minerals ministry for achieving the milestone effectiveness of successful completion of the first transaction of the National Gold Purchae Programme which aligns with the Administration’s drive to diversify the economy.
Hajia Fatimah Shinkafi, Executive Secretary of the Solid Minerals Trust Funds had told those that cares to listen that the London Bullion Market Good Delivery Standard is the only globally recognized stringent and trusted standard that enables the global trade on gold and silver bars.
She was emphatic that the National Gold Purchase Programme would go a long way ‘’ to enhance the country’s fiscal and monetary stability ‘’.
