|FG owes N80bn in judgment debt …to reduce domestic debt to N500bn by 2015, Tuesday, 17 Apr 2012|
(The Punch) The Minister of Finance, Dr. Ngozi Okonjo-Iweala, on Monday said the Federal Government currently owed N80bn in accumulated judgment debt. A judgment debt is the amount of money awarded by a court to a plaintiff against the defendant. Okonjo-Iweala, at the public presentation of the 2012 federal budget in Abuja, warned that the high judgment debt was capable of affecting the programmes of the Federal Government. The N4.697tn 2012 budget was signed into law on Friday by President Goodluck Jonathan. The minister said about N12bn had already been set aside this year by the government to offset part of the debt, adding that from 2013, such provisions would no longer be made. She argued that making such huge provisions for judgment debts constituted serious leakages in the system, and as such, was capable of encouraging corruption. The minister said any government agency that incurred judgment debt would have to bear the burden from its budgetary allocation.
Present at the event were the Ministers of Works, Education, Petroleum, Water Resources and Health, as well as the Director-General, Budget Office of the Federation, Dr. Bright Okogu and key government officials. Okonjo-Iweala said, "We currently owe N80bn as judgment debt, and this amount has not been paid. I have not seen this type of huge judgement debt before because it is very alarming. "We already have a provision of N12bn for judgment debt in the 2012 budget, but going forward, we are going to address this and the only way to curb it is to stop providing for any amount for judgment debt, thereby allowing any MDA that incurs judgment debt to pay for it from its budgetary allocation." She also vowed that the current administration would reduce the country's huge domestic debt to N500bn within the shortest time possible. The country's external debt stands at $5.9bn (N914.5bn), while the domestic debt is N5.96tn, giving a total debt portfolio of N6.87tn. The minister said, "At the present, our external debt stands at $5.9bn, while our domestic debt is N5.96tn. In Naira terms, both domestic and external debts stand at N6.8tn, while in dollars terms it is $44bn.
"In looking at this, we have to note that our debt to Gross Domestic Product ratio is 17.8 per cent; which is well below the 30 per cent target that we have set for this economy and much below the 60 per cent target that is the international norm. "Our debt service to revenue is 19 per cent against the generally accepted norm of about 30 per cent. I want to say that we are reasonably in good shape, but we do want to emphasise that we continue to be concerned about the rise up of domestic debt, and it is because of this that we are determined in this budget exercise in the medium term to bring domestic borrowing down, particularly in the light of the high interest rate that we are now experiencing. "We hope to be able to bring domestic borrowing down to about N500bn in the medium term by 2015, which we believe is the sustainable level of domestic borrowing." The minister also raised the alarm over the N1.658tn to be incurred as personnel cost by the government for the 2012 fiscal year, saying the amount represented 35 per cent of the aggregate expenditure.
She said, "The personnel cost of N1.658tn, which represents 35 per cent of aggregate expenditure, reflects the several wage increases granted in recent times, which led to a 93 per cent increase between 2009 and 2012. "The rising wage bill is disturbing because it undermines our ability to invest in capital projects, and when we talk about consolidation over the medium term, this is one of the areas we must look at." Okonjo-Iweala said the 2012 budget demonstrated the desire of the Federal Government to correct the structural imbalance in the economy.
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