Debt Profile: Nigeria Owes N21.7trn – DMO
BY EDMOND ODOK, ABUJA – With repeated teasing about poor economic management from the opposition Peoples Democratic Party (PDP), Nigeria’s debt profile under the President Muhammadu Buhari rose to N21.7 trillion mark as at December 2017 ending.
The Debt Management Office (DMO) said the figure represent a 25 per cent rise from N17.36 trillion recorded at the end of 2016.
According to the PDP, in its 16 years administration, the country borrowed only N3 trillion compared to the N11 trillion amassed in loans by the All Progressives Congress (APC) – led government just under three years in office.
However, the DMO explained that Nigeria’s debt as of June 30, 2015 was N12.12 trillion, indicating that the figure went up by N9.61 trillion, or 79.25 per cent within a period of 30 months between July 2015 to December 2017.
Director General of DMO, Ms Patience Oniha, who disclosed the figures in Abuja on Wednesday, said the debt stock indicated that by December 2017, external debt was 26.64 per cent of the total portfolio, an increase from 20.04 per cent recorded in 2016.
She stated that the domestic debt figure showed 73.36 per cent, a drop from the 79.96 per cent in witnessed in 2016 even as the Federal Government’s local debt stood at N12.59 trillion, with States and the Federal Capital Territory (FCT) figures at N3.35 trillion.
The DMO boss stated that the total debt profile is about 30 per cent foreign and 70 per cent local after the $2.5 billion Eurobond sale in February, adding that Nigeria had earlier in the month paid off about N130 billion worth of treasury bills maturing this week instead of rolling over the debt as it has done in the past.
Oniha stated that serious work is on-going for Nigeria to increase its ratio of foreign, dollar-serviced debt to local debt, in a bid to lower costs, adding that Eurobond sales last year boosted foreign reserves by $4.8 billion, in addition to February’s $2.5 billion gain while the nation is also expected to save about N81.66 billion after refinancing $3 billion of treasury bills.
Oniha said the total public debt as of December 31, 2017 represented 18.2 per cent of Nigeria’s Gross Domestic Product (GDP) for the year, maintaining that the nation’s debt has continued on sustainable path, well within the threshold of 56 per cent for countries in her peer group.
The DMO boss blamed the debt growth on economic recession that saw government having to spend hugely in order to get economy back on prosperity track just as she noted that the President Muhammadu Buhari administration has been spending more on infrastructure than other administrations in the past.
Oniha said the good news is that any foreign borrowing had to be tied to a project, explaining that government must borrow to re-balance its portfolio such that domestic debts with higher interest rates are reduced with foreign debts at lower interest rates.
“Through the issuance of particularly the FGN Bonds, we were able to transform the domestic debt market. If you look at 15 years ago, who will be talking about FGN Bonds yields? Using government securities to borrow, we have actually transformed the Nigerian market to the extent that there is now a dedicated institution known as the Financial Markets Dealers Quotation”, she said.
According to her, “We have had the positive sides. What the government is suffering is debt servicing. And that is why we are running a new strategy now. So, what we are saying is, if you look at December 2017, we have improved in terms of the mix of the portfolio.”
