Analysis of Nigeria’s debt misleading, mischievous – Presidency
The Presidency on Thursday took a swipe on a media report which
suggested that Nigeria’s debt rose by $18bn in four years.
In a statement issued by the Special Adviser on Media to the Minister
of Finance, Mr Paul Nwabuikwu, said that the story was malicious and
mischievous.
The full text.
The Daily Trust front page story of 11th May 2015 with the screaming
headline ‘Nigeria’s debt rises by $18bn in 4 years’ is mischievous,
misleading and ignores publicly stated facts. It is totally out of context
and skewed to misinform the public about the true state of the
nation’s debt profile and efforts made by the Federal Ministry of
Finance under the current Minister to keep it low. It is the latest in the
series of highly prejudiced and jaundiced reports by the Daily Trust
which negate its motto as ‘the newspaper you can trust’.
First, contrary to the negative impression created by the story, the
period 2011 – 2014 has actually experienced the lowest growth in
public debt due to the stringent measures put in place by the current
Minister of Finance, Dr. Ngozi Okonjo-Iweala. Daily Trust failed to
report that the public debt growth which was $24billion between 2004
– 2007 actually declined from $20.1billion for the period 2008 – 2010
to $18.3 billion for the period 2011 – 2014. It also failed to note that
the 2011 – 2014 figure of $18.3 billion also includes the domestic debt
of states which was not part of the earlier periods. This is a marked
improvement that deserves strong commendation.
Second the simplistic recourse to accusing the current Ministry of
Finance of ‘poor planning and reliance on bonds at very high yields’ by
an unnamed Harvard trained economist is nothing but a cheap and
transparent trick; it shows how inept and fragmented the analysis is.
One, it ignores the fact that interest rates are determined by market
realities which include the going Monetary Policy Rate (MPR) and the
inflation rate.
Two, a comparison of interest rates should be based on economies
with similar characteristics and level of development. A ‘Harvard
trained economist’ should know that it does not make any sense to
compare Nigeria’s interest rates with those of countries like the United
States and United Kingdom. The 13% interest rate is well within range
of similar economies.
Daily Trust was economical with the truth by not acknowledging that
the current debt profile was largely inherited by this government from
the 53.7% general wage increase for all categories of public servants
and political appointees in 2010. Another factor was counter-cyclical
spending which was made to stimulate the economy in response to
the global economic and financial crisis of 2008 – 2010 and prevent
the country from receding into a recession. The impact of the spike in
the domestic debt as a result of these two developments has remained a major factor in the high level of public domestic debt. This gap in the analysis of Daily Trust speaks volumes.
Also the claim that ‘current debt profile is higher than it was before
Nigeria secured debt relief from Paris Club’ is also out of context and
does not tell the whole story. In 2004, the external debt accounted for
77% of the overall debt profile, while the domestic debt was 23%.
Today, this picture has reversed with the external debt position now at
18% while the domestic debt now constitutes 82% of the overall debt
profile. The ability of the Ministry of Finance to keep the external debt
low has reduced the Government’s currency risk and helped greatly to
better manage the naira.
The evident bias and selective use of public information portrays Daily
Trust as a newspaper that is obviously out to misinform Nigerians and
deploy distortions to cause disaffection against the outgoing
government in furtherance of an agenda that is clearly not noble. This
mindset and the kind of journalism that it has inspired in Daily Trust
negate the fundamental principles that the newspaper is supposed to
stand for.
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