The Islamic Development Bank said on Tuesday that Nigeria is one of the countries in the world using a greater percentage of its revenues, up to 80 per cent, to service both its local and foreign debts.
The development came just as the Senate Committee on Foreign and Local Debts disclosed that Nigeria would spend N1.351tn in the 2016 budget to service its total debts which currently stands at $60bn with $10bn out of it being foreign loans.
The Resident Representative of IDB in Nigeria, Abdallah Kiliaki, who was on a courtesy visit to the Chairman, Senate Committee on Local and Foreign Debts, Senator Shehu Sani, said though Nigeria’s debts GDP ratio is low at 17 per cent, resources being used to pay the debts were enormous going by percentages taken on a yearly basis.
He said for Nigeria not to get itself suffocated by such a huge debt being serviced with limited resources, there was an urgent need for the country to expand the scope of its resources through diversification of its economy into other critical areas.
Kiliaki suggested an expansion of sectors such agriculture on the template of value addiction from production to processing and to export, saying such would earn Nigeria the required foreign income.
His said, “My visit is very crucial because we need to look at the debt profile of a country before we give it new contractual sort of financing. We also work closely with the International Monetary Fund and the World Bank to ensure that our financing has the required threshold of grant financing which is normally 35 per cent but at the same time there are financing that are not a burden on a country to the extent that the debt may not be sustainable.
“When talking about unsustainable debt, it means that a country or a borrower is unable to pay. So, we take very serious note of that. 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.
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