BY VICTOR OSOWOCHI – Amid public concerns over Nigeria’s rising debt profile, the Debt Management Office (DMO) says external borrowing of $15.368 billion in the last ten years hugely assisted in shoring up the Naira exchange rate.
Director-General of the DMO, Ms Patience Oniha said the $15.368 billion, raised from external borrowings between January 2011 and September 2021, did much to strengthen Nigeria’s foreign reserves as well as firm up the Naira at the foreign exchange market.
Speaking at the workshop on; ‘Understanding Nigeria’s Public Debt Management’ organised for the Senate Committee on Local & Foreign Debts and House Committee on Aids, Loans & Debt Management Secretariats in Zuba, Niger State on Monday, Oniha said there was more to external borrowings than just raising funds to finance budget deficits as perceived in some circles.
She explained that the activities of DMO were not limited to domestic financial markets, saying; “It may please you to note that the DMO has raised over $15.368 billion through Eurobonds and a $300 million diaspora bond to finance budget deficits and various projects.
“Through these securities issuance in the international capital markets, the sources of funding for the Federal Government have expanded, while it created opportunities for Nigerian corporates including banks to raise capital abroad.”
For the Director-General, more important is that the issued Eurobonds proceeds help to increase Nigeria’s external reserves, thereby supporting the Naira exchange rate, adding; “The new borrowings are undertaken in compliance with legislation and public debt is managed in accordance with international best practice and that debt is serviced in a timely manner.
“In the case of the latter, the DMO undertakes an annual Debt Sustainability Analysis and is guided by a Medium-Term Debt Management Strategy which is prepared every four years.”
On the 2021 external borrowing, the DMO boss, who explained that $4 billion out of the $6.18 billion approved in the 2021 budget has been achieved, said; “For the external, which is about $6.18 billion, we raised $4 billion in September.
“We did have what you will call demand, which is the same thing as an order book or subscription of over $12 billion, but the advisers said to us, let’s drop the interest rate a bit and see how much we get and also $6 billion at once is huge.”
