AfrOil: Gasoline subsidies called main driver of Nigerian public debt

Patience Oniha, the director-general of Nigeria’s Debt Management Office (DMO), said on September 27 that domestic gasoline subsidies were the primary cause of the ongoing rise in public debt.

Speaking during a presentation on budgeting and fiscal transparency at the Army Resource Centre in Abuja, Oniha explained that Nigeria’s public debts were being driven upward by budget deficits. This year, she stated, deficits are larger than anticipated because the federal government has arranged to borrow an additional NGN1 trillion ($2.32bn) this year in order to cover the additional cost of gasoline subsidies.

Oniha insisted, though, that Nigeria’s public debt levels were sustainable and still within acceptable limits. Currently, she noted, the country’s debt-to-GDP ratio stands at 23.06%, lower than the figure posted by other oil-producing countries such as Angola, with 136.54%; the US, with 133.92%; the UK, with 104.47%; Ghana, with 78.92%, and South Africa, with 69.45%. At the same time, she said, Nigeria is using tools developed by the World Bank and the International Monetary Fund (IMF) to ensure the sustainability of its public debt load.