Nigeria Owes N24.4trn – DMO

• FG -N19.234trn; 36 States -N5.166trn

BY EDMOND ODOK, ABUJA – Away from various controversial figures bandied around by political actors during the 2019 general elections, Nigeria’s official debt stock currently stands at N24.387 trillion ($79. 437 billion).

This is authoritative from the Debt Management Office (DMO) which says the nation’s debt profile as at December 2018, represents about N2.7 trillion or 9.1 per cent haul over the 2017 year-ending figure of N21.725 trillion.

Director General of DMO, Ms. Patience Oniha, who released the official national debt profile in Abuja on Thursday, said the huge rise in the figure was witnessed in the fourth quarter of 2018 with about N1.96 trillion or 8.03 per cent increase over the sum of N22.428 trillion as at September 2018 ending.

She also gave a breakdown of new borrowings since the advent of President Muhammadu Buhari-led administration on May 29, 2015 as N1.457 trillion in 2015; Official figure not availablefor 2016; N2.321 trillion – 2017; N1.643 trillion – 2018; and N1.649 trillion as proposed in the 2019 Appropriation Bill currently before the National Assembly (NASS).

Ms Oniha said 50 per cent of the N 1.649 trillion borrowings proposed in the 2019 budget will be sourced from foreign concessionary sources, with the remaining 50 per cent expected from domestic sources.

The DMO Director General further stated that domestic debt accounted for 68.18 percent of the figure comprising debts owed by both the federal and state governments, adding that the Central Bank of Nigeria (CBN) Official Exchange Rate of US$1/N306 as at December 31, 2017 and US$1/ N307.00 as at December 31, 2018 were used for the conversion of External Debt Stock to Naira.

On the Federal Government’s debt profile, the DMO boss said the amount rose to N19.234 trillion at the end of 2018, representing an increase of 11.80 per cent over the December 2017 figure of N17.117 trillion, adding that the remaining amount represents the outstanding figure against the 36 States’ governments.

Ms Oniha, who also spoke on the Promissory Notes, said the Federal Executive Council (FEC) approved the establishment of a Promissory Note Programme for the settlement of Inherited Local Debts and other contractual obligations of the federal government.

According to her, the Programme, estimated at N3.4trillion, would also be deployed to off-set judgment debt and export grants to beneficiaries.

She said among the expected benefits of the programme are the provision of stimulus to the economy and the capacity to unlock investments across a number of sectors currently having liquidity issues. “It will also have positive impact on the non-performing loan ratios of banks which will in turn, increase the banks’ capacity to lend and enable the Federal Government to formally recognise and account for its true liabilities in line with the International Public Sector Accounting Standards (IPSAS)”, the Director general said.

For her, these Notes would positively impact the economy as sovereign instruments, negotiable with liquid asset status, adding that by December 31, 2018, about N331.12 billion Promissory Notes had already been issued to oil marketers and state governments.

Dismissing worries over government’s 2019 borrowing plan, she explained that the focus is on longer-tenor bonds of up to 30-years with relatively low interest rates, compared to 2017 levels of over 18 per cent.

According to her, the benefits of such long-term instruments include Federal Government’s capacity to raise long-term capital for infrastructure, while also providing the benchmark for private sector operators to likewise raise long-term investment funds from the Capital market.

Ms Oniha said the development will reduce short-term debt as well as deepen the Life Insurance sector in particular, adding that DMO was confident the huge pension funds in the country would be usefully channeled into investments in long-term debt instruments of the Federal Government and corporate organisations that would follow ultimately the government example.