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2013 Budget will be used to Pay Off Debts – Okonjo Iweala

By on July 10, 2012

The Minister of Finance and Coordinating Minister of the Economy has gone back to her roots as a debt retirement specialist. Speaking recently on her concerns over the escalating domestic debt portfolio of the Federal Government, she declared that the 2013 budget will be used to pay off the country’s debts.

Nigeria’s domestic debt profile currently looms at an imposing N 5.9 trillion.

The minister of finance speaking  during a consultative meeting with members of the Organised Private Sector (OPS) and Civil Society Organisations (CSOs) on the 2013 budget said the 2013 budget would be tight.

Her words: “We need to slow down the rate of borrowing domestically, it is worrisome. The interest rate at which the Federal Government is raising debt at the moment is high; we are raising debt at 15 per cent, which is on the high side.

“Since I came on board, we have been trying to decelerate the rate at which the domestic debt is accumulating. In the 2011 budget, we borrowed N852bn, we reduced it to N744bn in the 2012 budget and we are going to take it further down in the 2013 budget. What we are aiming for is to bring it down to a level of about N500bn in the medium term, which we think is a reasonable level.”

She added, “We are proposing in this budget a sinking fund where we can put few of our money in the form of bonds. Efforts are being made to make sure that the sinking fund is effectively managed, considering the nation’s domestic debt profile.”

The minister was clear in her statement that the debt-to-GDP ratio was still very manageable at less than 30% and that the external debt portfolio was not a source of concern.

She said, “Both domestic and external debts are still below 30 per cent. The target we set for ourselves is 30 per cent to 35 per cent, while the standard limit for our peer is 40 per cent. Our problem is not the external debt.”