Contrary to persistent claims by the Peoples Democratic Party (PDP) governorship candidate in Osun State, Mr. Iyiola Omisore, that the state government under Governor Rauf Aregbesola is indebted to the tune of over N350 billion, the Debt Management Office (DMO), in Abuja has said the state debt profile is a very sustainable one which is healthy for its economic growth. The Director General of the DMO, an agency under the Presidency, Dr. Abraham Nwankwo, disclosed that the state was one of the best states in the federation with public debt management, describing the claims to heavy debt burden in Osun State as mere propaganda and hoax.
Fielding questions from journalists at MicCom Golf Hotel and Resorts, Ada, Osun State at a three-day retreat for members of the House of Representatives Committee on Aids, Loans and Debt Management, Nwankwo declared that Osun State's debt status was very sustainable. A former Head of Service under the Aregbesola administration, Mr. Segun Akinwusi, had equally built and sustained his campaign for the governorship seat on the claim that the state government owes over N350 billion. The state government had severally told the world that only those ignorant of operations of the financial world would agree that a bank can give a state or individual loans more that its capacity to pay both interest and the principal. Nwankwo, who did not give figure on the actual debt figure of the state, explained that the state needed to be encouraged in term of management of debt because it had not borrowed beyond its capacity.
The DMO boss said that Osun State was one of the states in the federation with good and stable public debt management, adding that his office recognises the state as the first state to take Sukuk and "by our plan to encourage the issuance of Sukuk in Nigeria because, we need to diversify the instrument in the bond market. "We want to make sure that all segments of the society is captured in the bond market because there are some groups of people or individuals who do not want to participate in ordinary bond because of interest. "Our office, DMO and others are working hard to introduce Sukuk in Nigeria. We are delighted that Osun took the initiative and helped in introducing it in Nigeria. So, by that, Osun is one of the best states in public debt management." He also stated that the nation's debt GDP ratio has fallen from 22 per cent to 13 per cent. He added that "our debt is sustainable because GDP is much lower now. However, in spite of that, government will continue to be very prudent, conservative in its spending."
According to him, "From my submission, I told the lawmakers that the GDP ratio is about 12 per cent and this includes both external and domestic debt for both the federal and state governments. "I emphasised in my discussion with the House of Representatives Committee on Aids, Loan and Debt Management that the focus should be on having more revenue to service debt and therefore even based of debasing of Nigeria GDP, our debt GDP ratio has fallen from about 22 per cent to less than 13 per cent. This does not mean that we are in a position to borrow more, because GDP has improved dramatically.
"However the poor attitude of Nigerians to paying their tax as many enterprises in the country -small and medium scale businesses that should be in the tax bracket - are not in the tax bracket and because many Nigerians who should pay tax are not willing to pay their taxes, the tax revenue GDP ratio is low and it is from revenue that government is able to service the debt or borrows. Therefore, until our tax revenue to GDP ratio improves significantly, government will continue to be conservative in borrowing.