BY COBHAM NSA, ABUJA – Against the backdrop of Federal Government’s decision to borrow about N1.6 trillion to fund the 2018 budget deficit of N1.95 trillion, the Debt Management Office (DMO) says it has already raised N410 billion from the domestic capital market as public borrowings for that purpose.
The DMO also disclosed that the country’s public debt profile as at end of June stood at 73.31 billion US dollars (about N22.4 trillion), with about 22 billion US dollars representing the external debt figure
Director-General of DMO, Ms Patience Oniha, who briefed the press in Abuja on Tuesday said the debt figure indicated that the Public debt stock dropped by 1.4 percent to N22.4 trillion in June 2018 as against N22.7 trillion recorded in March 2018.
According to Oniha, “The decrease was due to a 3.4 percent decline in the FGN’s Domestic Debt Stock between March and June 2018,”
She also explained that; “A major highlight in the Public Debt Data was the consistent decrease in the FGN’s Domestic Debt which declined from N12.589 trillion in December 2017 to N12.577 trillion in March 2017 and N12.151 trillion in June 2018, occasioned by the implementation of the Debt Management Strategy of the DMO.”
For the DMO boss, Nigeria’s debt was still sustainable at about 18 per cent of the GDP, stressing that its Debt Management Strategy has largely contributed to the interest rate dropping from about 18 percent last year to the current range of between 11 and 14 percent.
The Director General expressed happiness with the derivable outcome from effective implementation that the Public Debt Management Strategy with an overall objective of ensuring Nigeria’s debt remained sustainable.
Further defending the federal government’s position on borrowing to finance the 2018 budget, Oniha said government must borrow to function efficiently given that the nation witnessed about 50 per cent drop in its income flow.
“Even if we don’t take new loans, the devaluation of the Naira from about N165/$1 to N305/$1 created increment arising from exchange rate differential. But what I can assure you is that we are better off than where we are coming from”, she said.
Oniha, who attributed the reduction in FGN’s Domestic Debt Stock to the redemption of N198 billion Nigerian Treasury Bills in December 2017 and another N639 billion between January and June 2018, said about 3 billion US dollars was raised through Eurobonds to re-finance maturing domestic debt as part of the implementation of the debt management strategy for the purpose of substituting high cost domestic debt with lower cost external debt to reduce debt service costs for the Government.