Local debts killing economy, Senate tells FG

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Leke Baiyewu, Abuja

The Senate, on Tuesday, asked the Federal Government to settle all its debts to local contractors in the interest of Nigeria’s economy.

The upper chamber of the National Assembly, specifically, “Urge the Federal Government to appraise its indebtedness to the local contractors; and urge the Federal Government to propose a framework and repayment plan for servicing of these debts.”

The lawmakers, while lamenting the plights of local contractors owed by the government, made reference to a report by the Central Bank of Nigeria on Federal Government’s indebtedness to the local economy “and its effects in protracting the current economic situation.”

The Senate made the call based on a motion moved by the lawmaker representing Lagos Central Senatorial District, Senator Oluremi Tinubu, at the plenary on Tuesday.

The motion was co-sponsored by Senators Shehu Sani (Kaduna Central), David Umaru (Niger East), Gbenga Ashafa (Lagos East), Solomon Adeola (Lagos West) and Magnus Abe (Rivers East).

The Debt Management Office had on February 16, 2017, said the total external and domestic debts of the Federal Government, states and the Federal Capital Territory is $57.39bn or N17.36tn.

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The DMO said the the sum was made up of external debt of $11.41bn (N3.48tn) and domestic debt of $45.98bn (N13.88tn).

The office also said the domestic debt of the Federal Government, the 36 states and the FCT accounted for about 79.96 per cent of the total public debt stock, while their external debt stock accounted for about 20.04 per cent.

The Director General, DMO, Dr. Abraham Nwankwo, who appeared before the Senate Committee on Local and Foreign Debts to defend the 2017 budget estimates of the office, said the external debt profile of the Federal Government alone rose from $10.71bn in 2015 to $11.4bn in 2016, representing an increase by 6.53 per cent.

Tinubu, while moving the motion, said, “The Senate is disturbed that further delay in servicing these debts may adversely affect business organisations, owing to the fact that many businesses are indebted to banks. Further delay may subsequently affect financial organisations.”

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The lawmaker recalled that there was a newspaper report in January which said banks were owed over N465bn by oil importers alone.

” We are disturbed because it is also alleged that the mounting debts owed to the banks are as a result of failure by the Federal Government to pay outstanding subsidy arrears before entering into the new oil pricing regime,” she added.

Tinubu also referred to another newspaper publication in January which put banks’ bad loans at N856.9bn, with the upstream oil and gas, general commerce, manufacturing and power sectors accounting for a significant portion.

She said, “The Senate is worried that this could spell doom for the banking and the financial services sector.

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