The Debt Management Office (DMO) has countered the Buhari led administration’s plans to seek a loan of $30 billion dollars.
The President Buhari had written the National Assembly requesting an approval to borrow $29.960 billion or N10 trillion for proposed projects across the country.
DMO disagreed with the President saying if he must borrow, the amount should not exceed $22.08 billion dollars warning that the move may further unsettle the economy.
DMO gave the recommendation on Tuesday in its 2016 Debt Sustainability Analysis (DSA) report.
“The maximum amount that can be borrowed by FG in 2017, without violating the country-specific threshold, will be 22.08 billion dollars.
It explained that the development supported the use of more external finance for funding capital projects.
The DMO stated that FG can achieve development by substituting the relatively expensive domestic borrowing in favor of cheaper external financing.
“This policy stance has been reinforced by the recent deterioration in macroeconomic variables, particularly with respect to the rising cost of domestic borrowing.
“Hence, the shift of emphasis to external borrowing would help to reduce debt service burden in the short to medium-term.
“This will further create more borrowing space for the private sector in the domestic market.
“Accordingly, the maximum amount that can be borrowed is 22.08 billion U.S. dollars for 2017.
“The amount is proposed to be obtained from both the domestic and external sources.
“The sources for the said amount includes New Domestic Borrowing of 5.52 billion U.S. dollars and New External Borrowing of 16.56 billion U.S dollars”, it added.
Nigeria’s total debt portfolio rose by 30% to hit $62 billion in 2014, up from $47.6 billion as at September 2013.
The country’s external debt stood at $9.52 billion, 15% of the entire debt stock.
Domestic borrowing, however, accounted for bulk of the total money owed by Africa’s largest economy.