The Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, yesterday, as expected unveiled the priority sectors with which to drive the economy. In her maiden press briefing, in Abuja, she identified job creation, building critical infrastructure especially electric power and roads/ rails, anti-corruption, agriculture, manufacturing, fiscal discipline, investment climate reforms, housing, entertainment, as well as, oil and gas as sectors to focus on to drive the economic transformation agenda of the government.

All of these are good intentions. But they have to be financed. The nation needs huge resources it does have at the moment to implement and bring this policy framework to fruition, but where will the financial resources come from. Debt financing or massive borrowing? Dr Okonjo Iweala is already averse to domestic borrowing. She said that Nigeria “would critically review the borrowing processes with a view to reducing the rate, especially of domestic debt. One of the things we would do is to pay attention to the debt situation. I know that many Nigerians are looking at it with concern, and you know my stand on debts.


Domestic debts
“We have about N5.2 trillion in domestic debts and about $5.3 billion in external debts. Bringing total debt figures to $39.7 billion which is about 20 per cent of GDP, Gross Domestic Product.” Nigeria borrows to finance recurrent expenditure. Will the finance minister cut the recurrent allocation to ministries, departments and agencies of government as well as the National Assembly? Where is she going to start the cut from, the Presidency to stem the rising llevel of borrowing?

The minister noted that the total debt figure as a percentage of GDP was not worrisome, as according to her, debt/GDP ratio could become of concern if it hits the 60 per cent threshold, in line with international norm. She said the external debt was “extremely low” and all concessionary but that the domestic debts mainly in Federal Government Bonds and Treasury Bills would be brought down through a systematic approach. The minister has chosen a path that if followed carefully will lead to economic recovery. The nation has for long neglected infrastructure and Nigeria’s trade and commercial policy have lagged behind. A review that will ensure sanctity of contract has become imperative.

Sovereign debts
Sovereign debts in recent months have become a global problem raising serious concern on the health of the international economy. The United States of America had almost a political crisis as a result of the debt ceiling the Congress refused to allow. In Europe Greece, Italy, Spain and others are facing economic crisis at home because of huge debt which they can not service leading to the need for bail out.

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