The Director General of the Debt Management Office (DMO), Patience Oniha, has identified the inability of Nigeria to meet its OPEC daily production quota as one of the reasons for the current debt challenge facing the country.
Ms Oniha stated this while appearing before the House of Representatives Committee on Aids, Loans and Debt Management on Monday in Abuja.
Chairman of the committee, Ahmed Safana, had expressed surprise at the nation’s increasing debt profile.
He asked the DMO to explain why there is a huge increase in domestic and external debts.
Mr Safana said there was an N1 trillion increase in the nation’s debt profile in the last one year.
According to the DMO, as of June 2022, the total total-public-debt of the federation was $103.3 billion.
Responding, Ms Oniha said if Nigeria had taken advantage of the hike in recent crude oil price, the nation would not be in the current debt situation.
“If all we did was produce our quota of crude oil, we would be in a surplus— oil price doubled the budgeted price,” Ms Oniha said.
Despite the 1.830 million barrels per day quota approved by OPEC, Nigeria has repeatedly failed to meet the quota due to oil theft and vandalisation of pipelines.
The DG also frowned at the inability of the government to raise revenue while also embarking on big budgets.
She stated that the country must look at both revenue and expenditure to address the surging debt profile.
“It is also probably possible to start looking at the expenditure, if you cannot afford it, or can only afford it through large borrowing, you may have to reconsider. I agree with you (lawmakers) that our budget size is small, relatively to our GDP,” she said.
Ms Oniha also informed the lawmakers that Eurobond is not an option because of the global uncertainty due to the Russia-Ukraine war.
She said that most creditors are focusing on the US and other AA rate markets.
She stated that those investors have a limit in terms of the risk they can take.
“Before you could go to Eurobonds and raise funds, we don’t know when the world would recover. Already, the UK is talking about recession and we don’t know who else. I think it is strategic for us, as a nation, beyond the DMO, we have to look for revenue,” she said.
She added that in Africa, only Nigeria and Egypt have issued Eurobonds recently, adding that no other country in the continent has been able to raise money from Eurobonds.
Last month, President Muhammadu Buhari presented a budget of N20.51 trillion to the joint session of the National Assembly for 2023. The proposed budget has a deficit of N10.78 trillion.