Nigeria to spend 24% of revenue on debt servicing in 2016

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Nigeria is to spend 24 per cent of its revenue in 2016 for debt servicing, which is lower than the amount recent speculated.  The Representative of Islamic Development Bank (IDB), in Nigeria, Abdallah Kiliaki said recently that the country pays about 75 of its debt for debt servicing.

Kiliaki was quoted to have stated during a visit to the Chairman, Senate Committee on Local and Foreign Debts, Shehu Sani.

“When talking about unsustainable debt, it means that a country or a borrower is unable to pay. So, we take that very seriously. When you look at the debt GDP ratio of Nigeria, it is very low. It is 17 per cent compared to Italy and other countries which is about 150 per cent, while that of the United States is about 100 per cent. But there is a caveat; it is true that debt to GDP ratio is low but when you look at the amount, the revenue to debt servicing ratio, the amount of money that the government is collecting, the revenue of the government vis-a-vis the ratio to the total debt, I think Nigeria pays about 75 to 80 per cent of its revenue to service debt,” Kiliaki had said.

Government agencies and some financial experts had faulted the statement of the IDM representative. However, the 2016 Appropriation Bill passed   last week, about N1.48 trillion will be used to service debt, which is about 24 per cent of the total   budget. This is lower than the 32 per cent spent in 2015.

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