“Indeed, the multifaceted challenges facing most developing countries have placed a debilitating chokehold on their fiscal space. This equally calls for the need to address the burden of unsustainable external debt by a global commitment to the expansion and extension of the Debt Service Suspension Initiative (DSSI) to countries facing fiscal and liquidity challenges as well as outright cancellation for countries facing the most severe challenges,” the President said.

Established in May 2020 at the height of COVID-19, the DSSI helps countries to free their resources from burdensome debt servicing to fight the pandemic and safeguard the livelihoods of the most vulnerable people. At the expiration of its initial phase in December 2021, 48 out of 73 eligible countries participated in the programme with $12.9 billion in debt-servicing payments suspended. Though Nigeria is considered eligible, it did not participate in the scheme.

Like many others, Buhari is seeking a review of the DSSI, which provides temporary relief to heavily-indebted countries plus “outright cancellation.” If Buhari was making the request on behalf of Nigeria and other developing countries, it would be the first time the administration would admit, albeit covertly, that the country is, indeed, facing debt sustainability challenges.

At different fora, the Minister of Finance, Budget and National Planning, Zainab Ahmed, has dismissed cautions by experts, insisting that the country’s sovereign debt (which has ballooned from a little above N12 trillion to N42.8 trillion in about seven years) was within reasonable limits. Speaking at the International Monetary Fund (IMF)/World Bank yearly meetings, last year, the minister told others with dissenting views, including the former holder of her office, Dr. Ngozi Okonjo-Iweala, that there was no reason to be worried about the country’s rising debt stock as it was within the manageable limit. She anchored her argument on the relatively-low debt to output ratio even while the revenues were in tatters.

Buhari’s request has raised several questions, bordering on logic and economics. How would a country go on a borrowing spree only to spend the proceeds on supporting another country whose challenges are less in magnitude? What efforts has the country made to cut its bloated recurrent expenditure since the economy has been in shock? What has the administration done to block the obvious linkages in the public sector?

Oil theft has been a major drain on public finances. Has the government done anything radically different from the norms to tackle the challenge? How many government officials stealing from the public purse have been brought to book? What has the government done with the borrowed funds?

The President’s trip to New York itself is a telling reflection of the profligacy the Nigerian government is known for, historically. With the retinue of aides, ministers, governors, family members and other dignitaries, his critics have described the trip as an unnecessary show. At the same time, the President was in New York, the Federal Inland Revenue Service (FIRS) accused ministries, agencies and departments (MDAs) of using consultants to carry out tax assessment collection, accounting and enforcement, contrary to the provisions of relevant laws on tax administration. Simply put, the MDAs recruit and pay consultants for the same job FIRS was set up, thus increasing the already expensive tax management.

The demand also came barely a week after the Director-General of the Budget Office of the Federation, Dr. Ben Akabueze, said the country must address a revenue shortfall, a challenge he admitted is “testing limits of (debt) sustainability.”

The economist said the country would need to raise the revenue profile or “we would be faced with a real debt crisis” but dismissed wasteful spending as non-existence in line with what has become his cliché.

The DG stuck to his gun, insisting the country will not resort to “cutting back expenditures” because today’s expenditure to GDP ratio is the lowest in Africa and amongst all developing countries except failed states.

“We are not in a place where FG is spending too much money. We are in a place where FG is not spending enough. That is why social sectors are not liquid enough, not to talk of deficit to infrastructure… Cutting back on expenditure is not a sustainable solution because it has medium to long-term effects, and there is a need to focus on revenue.”

This debt crisis, which Prof. Godwin Owoh described as an avoidable calamity, is a doom foretold years back. The country currently gropes in darkness with red lights constantly flashing on the economic dashboard as a constant reminder of the imminent calamity.

Perhaps, there is no stronger sense of foreboding of the skewed fiscal position than the budget performance of recent months. For the first time in living memory, the country’s debt servicing cost to revenue hit and exceeded 100 per cent. Indeed, the Federal Government fumbled from January to April with a debt servicing to retained revenue ratio of 119 per cent.

The FG’s retained income flattened to N1.63 trillion against N1.94 trillion that went into debt servicing. The fiscal deficit spiked to over N3 trillion or 190 per cent even as capital expenditure was pegged at less than one-fifth of the total amount spent in the period.

Debt financing has gradually emerged as the pattern of managing the country’s deficits in recent years, a situation that has increased the country’s public debts by over 253 per cent since Buhari received the reins. As at June 30, 2016, a month into the Buhari administration, the sovereign debt was N12.12 trillion. The figure has ballooned to over N42.8 trillion and is still rising. And that excludes over N20 trillion owed to the Central Bank of Nigeria (CBN).

Still, there are other contingent liabilities to employees of government, local and international bodies. The Ministry of Finance, Budget and National Planning estimated parts of the outstanding liability at N4.6 trillion with a caveat that it could increase by 50 per cent in 12 months.

But the real indebtedness, Owoh said, is the waste, mismanagement and corruption the administration has been associated with. He believes the President would have struck a better chord at the UN meeting if only he sought the assistance of the western countries to curb the embarrassing oil theft that has sent the petrodollar economy spiraling. He wondered how anybody would listen to a country with no audited financial reports on the activities of the government and its agencies in the past years.

Whereas the government has engaged in a borrowing spree, the external reserves have declined to less than 60 per cent of their all-time high (ATH) of $64.8 billion, which was achieved in August 2008. The international oil market has seen the spike witnessed in the 2000s when Nigeria built its reserves as well as excess crude account (ECA) and the sovereign wealth fund (SWF). But the Federal Government has engaged in dissaving even as fiscal deficits have increased to a level not seen in the history of the country.

As at July 22, the ECA had been deleted to $376,655.09, from $2.2 billion left in the coffer by the former administration. Created in 2004 by former President Olusegun Obasanjo for saving oil revenue in excess of the budgeted benchmark. From the beginning of the year, oil has sold far above the budget benchmark but the government claims that PMS subsidy payment is a major drain on the finances, including what should have been saved.

The squeeze on public finances is, according to some economists, understandable. But the spending pattern and priority of the government have raised questions about the political leaders’ sense of judgment and readiness to bite the bullet.

For instance, while the finance minister said the FG could not remit the differential between estimated and actual prices of crude to ECA in the past four years owing to excessive spending on insecurity, the government had recently incurred N1.45 billion on vehicles bought for the Niger Republic to combat crimes in its territory. The government has also come under fire for committing $1.9 billion to the Kano-Maradi (Niger Republic) rail project. The fund, according to the former minister of transport, Rotimi Amaechi, would be sourced from Europe.

In recent years, only about 30 per cent of yearly budgets have been allocated to capital projects, even as performance rarely reaches 70 per cent, while the bulk of the spending goes into debt servicing and recurrent expenditure.

The government repeatedly uses constitutional provisions on spreading ministerial appointments across the country to defend the bloated personnel cost. Sadly, the administration has not made any progress in the implementation of the Oronsaye report, a document that speaks to how the government could practically streamline duplicative agencies and rein in the cost of bureaucracy.

Prof. Bongo Adi of the Lagos Business School said Buhari’s requests in New York fly in the face of all logic even though he admitted that “the only way out of the current mess is seeking debt reprieve.”

Adi, an economist, said the debt overhang puts Nigeria in a situation worse than that of the proverbial prodigal son with Buhari’s request demonstrating the level of incompetence, corruption and lack of focus of his team.

“You waste your resources and go borrowing to waste and execute projects in another country. Suddenly, you are asking the lenders for relief. Nobody will listen to the country. Do we need debt relief? Yes, we do. But who is going to listen to us? Buhari should not be the one making such a request,” Adi said, insisting that Nigeria’s problems are self-inflicted. He added that it is the first time oil prices would be bullish while savings are being depleted amid a currency crisis.

But Owoh insists it is not in a situation where it can demonstrate that it has exhausted its options to deserve debt relief. He wondered how the country would continue with self-inflicted burdens and expects the rest of the world to be sympathetic to it.

“The government has failed. You need to exhaust the fundamentals that show that you have exhausted all capacities to grow but are constrained by some exogenous factors. That is the basis for defining highly indebted countries. The presumption is that those countries have made every effort – they are transparent; their governance is efficient but they are unable to rise to the occasion because of certain exogenous factors,” Owoh noted.

Nigeria secured relief from debts incurred by the military during the administration of Olusegun Obasanjo. By 2006, the country fulfilled all its obligations and started on a clean slate. Back then, the country had just risen from the ashes of traumatic military years.

The west were, naturally, sympathetic to the country. Today, just when the world expects the country to be stable enough to join hands with others to support the most vulnerable countries, debt, once again, is beginning to burden the country’s self-survival.