Friday, June 14, 2019

FACT CHECK: How correct is Melaye’s claim that APC borrowed N11tr in three years?

FACT CHECK: How correct is Melaye’s claim that APC borrowed N11tr in three years?
March 13
11:03 2018

Dino Melaye, the senator representing Kogi west, recently said the APC administration has incurred N11 trillion debt in three years as against N6 trillion borrowed by the PDP in 16 years.

“About $5.5bn was borrowed from euro bond; what part of it will the youths of this country benefit from? About $1bn is to be spent on security and how does this affect the youth of this country?” the senator said reacting to the rejection of the Peace Corps bill by the president.

“The Peoples Democratic Party, in 16 years, borrowed N6 trillion and this government in three years, has borrowed N11 trillion but there is no specific programme that will empower the youth.”

Using data from the Debt Management Office, which coordinates the management of the debts owed by all tiers of government, TheCable sought to verify the authenticity of these claims.

Claim 1: PDP borrowed N6 tr in 16 years

Okonjo-Iweala, twice minister of finance under PDP

From the senator’s statement, it is difficult to ascertain if he was referring to state debts or federal government debts or both.

The PDP was in power between 1999 and May 2015 when Muhammadu Buhari, APC candidate, assumed office.

Using figures made available in the National Debt Management Framework, Nigeria’s external debt peaked at N4.77 trillion in 2004 — but these includes debts owed from the 1970s.

This was before the Obasanjo-led administration negotiated an $18 billion relief with Paris Club.

Source: National Debt Management Framework (2008-2012)

These figures coincide with this statement by Ngozi Okonjo-Iweala, coordinating minister for the economy and minister of finance, in 2013.

“In 2004, prior to the Paris Club debt relief, Nigeria’s overall debt stock was very high. External debt stood at US$35.9 billion while the stock of the domestic debt amounted to US$10.3 billion resulting in a total of about US$46.2 billion or 64.3% of GDP excluding contractor and pension arrears,” she wrote.

“In August 2006, when I left office, Nigeria’s foreign and domestic debts amounted to US$3.5 billion and US$13.8 billion respectively – a total of US$17.3 billion or 11.8% of GDP.

“By August 2011, when I resumed for the second time as finance minister, the domestic debt stock had grown substantially to US$42.23 billion, while the external debt was still a modest US$5.67 billion. This implied a total debt stock of US$47.9 billion.”

From these figures, external debt increased by $2.17 billion between 2006 and 2011.

“Following the debt write off, external debt fell to $3.5 billion, while domestic debt rose to $13.8 billion in 2005, giving a total public debt of $17.3 billion and a debt-to-GDP ratio of 11.8%,” a 2013 document, Understanding Monetary Policy Series, by the CBN reads.

“Nigeria’s public debt stood at $58,643.18 million as at September 2013.”

This means that between 2006 and 2013, Nigeria’s external debt stock had risen by $2.36 billion.

Using the 2007 exchange rate (N116.80/$) used by the DMO in the figure above, the external debt stock increased by N275 billion during that period.

This means that Nigeria’s external debt between 1999 and 2013 was N5.05 trillion.

Table of Nigeria’s domestic debt (billion naira) compiled by Nairametrics

From this above, it can easily be calculated that the federal government added a debt of N8.04 trillion between 1999 and 2015.

An addition of both external and foreign debt will result in N13.09 trillion.

Conclusion: Melaye’s claim that the PDP-led government borrowed N6 trillion in 16 years is not supported by data.

Claim 2: APC borrowed N11 trillion in three years

The last debt stock released by the DMO accounted for debts up to September 30, 2017.

According to these DMO tables above, both federal and state governments added N8.2 trillion between June 2015 and September 2017.

The federal government added N4.1 trillion in domestic debt and together with states added N2.6 trillion in external debt leading to a total debt stock of N6.7 trillion.

Conclusion: Melaye’s claim that the APC government has borrowed N11 trillion in three years is not supported by facts. Perhaps, the senator is adding the CBN overdraft of N4.7 trillion naira to the federal government in 2017, in which case the total would be N11.4 trillion. But overdrafts are usually temporary — like an advance — and normally offset from government revenue. The TSA balance more than offsets the overdrafts and no interests are charged.

Editor’s Note: This report has been updated.


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