On Tuesday, The Federal Government declared that it borrowed N3.57tn between June 2015 and March 2017 to finance budget deficits.
The government said this in response to an enquiry by The PUNCH, which sought to know what use it had put the funds being borrowed in the last two years from both external and local sources.
The enquiry, which was addressed to the Minister of Finance, Mrs. Kemi Adeosun, under the Freedom of Information Act, sought to ascertain the specific projects that the borrowed funds were used to execute.
The minister, however, referred the enquiry to the Debt Management Office for response.
In its response, the DMO hinted that the domestic borrowing was not tied to any specific projects but warehoused in the Consolidated Revenue Fund Account with the Central Bank of Nigeria for funding budget deficit, while the foreign loans were tied to specific projects.
According to the DMO, the official exchange rate of N306.35 to $1 was used in calculating the country’s external debt for March 31, 2017, while the official rate of N197 to $1 was used in determining the foreign debt for March 31, 2015.
The domestic debt component of the states stood at N2.96tn as of March 31, 2017, up from the figure of N1.69bn as of March 31, 2015.
This means that within the period of two years, the domestic debt of the states rose by N1.27tn or 75.15 per cent.
With drying revenues from oil and gas, the government in the last two years has increasingly depended on borrowing even to carry out routine responsibilities.
Although foreign debts are seen as cheaper than domestic debts, the government has increasingly depended on local debts as foreign donors place more stringent conditions on its path.
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