- Debt Profile Rose By 0.61% In 3 Months
- Says FG Honouring Obligation By Servicing Debt
- Domestic Borrowing Soars By 134%, Hits N52tn
The issue of Nigeria’s ballooning debt profile came to the fore again on Wednesday, December 20, 2023 as the Debt Management Office (DMO) disclosed that the country’s total public debt as at September 30, 2023 has increased N87.91trn.
More worrisome, the debt office said the debt stock represented a marginal increase of 0.61% when compared to the June 30, 2023 figure of N87.38trn.
The Matrix reports that the DMO made this known in a statement on Wednesday, noting that the amount represented domestic and external debts of the Federal Government, the 36 state governments and the Federal Capital Territory, Abuja.
READ ALSO: DMO: Nigeria’s total debt rises slightly in September 2023
“This trend is explained by the decrease in External Debt from USD43.16 Billion as at June 30, 2023 to USD41.59 Billion as at September 30, 2023 and a relatively moderate increase of N1.80 Trillion in the Domestic Debt,” the statement partly read.
“External Debt decreased due to a redemption of a USD500 million Eurobond and the payment of USD413.859 million as first principal repayment of the USD3.4 Billion Loan obtained from the International Monetary Fund in 2020 during Covid-19.
“The servicing of these Debts in addition to other Debts, are clear demonstrations of the FGN’s commitment to honouring its debt obligations.
Notwithstanding, Mr President’s initiatives and actions towards revenue generation remain important for Nigeria’s overall fiscal balance.”
READ ALSO: MDA’s Electricity Debt: FG budgets N40 billion For 2024
Meanwhile, the total domestic debt stock has risen by 133.95 per cent to N51.96tn as of the end of 2023.
This is based on new revelations by the Director-General of the Debt Management Office, Patience Oniha.
While speaking to CNBC Africa on the sidelines of the discussions for the establishment of the African Debt Managers Initiative Network spearheaded by the African Development Institute of the African Development Bank in Abuja, she disclosed that the Federal Government had raised N7.04tn as total new domestic borrowing in 2023.
Oniha said, “I am happy to say that in 2023, the new domestic borrowing was N7.04tn, and as we speak that has been raised in full. So, I don’t need to explain how we raised it, but it has been raised. When you compare it to the N3.5tn of last year. It tells you that the market has debt for us to raise money.”
READ ALSO: Umahi Accuses Buhari Administration Of N6 Trillion Debt
As of the end of December 2022, Nigeria’s total domestic debt was N22.21tn. This increased significantly by the end of June to N48.32tn.
Defending the jump, DMO explained that the major addition to the public debt stock was the inclusion of the N22.71tn securitised FGN’s Ways and Means Advances, which was reflected in domestic borrowings.
Commenting on the makeup of debt, Oniha noted that several of the investors in the securities issued were institutions whose balance sheets were growing including asset managers, fund managers, including pension funds, insurance companies, and banks.
She stated, “We still had an auction this week. Subscription levels have been good, and the rates have been very responsible below the monetary policy rate, so it just tells you that there is liquidity.” She declared that the government expects its outing in the domestic market to continue in 2024.
When she was asked about the foreign market, the DMO DG noted that rates have been high due to high inflation rates.
She highlighted, “There is still uncertainty around the world from the Russia-Ukraine war. So foreign investors are a bit more cautious. Let’s use the word, risk-averse and they are investing in those securities that are triple A or double A rating that are offering them high rates, four per cent, five per cent.”
She, however, argued that based on available data It could be speculated that stability was returning to the market.
Also commenting on revenue, Oniha decried the challenge that the country has faced with raising enough to meet its need due to high dependence on oil.
She added, “Several governments had tried to change that narrative, improve revenue, but now we see a presidential committee on fiscal reforms and taxes, so we expect the narrative to change to higher revenues. If you look at the MTEF for 2024 to 2027, you can see the direction in that regard.
“If you increase revenues, clearly your need for borrowing will be reduced. With your revenues, you can provide more services. But also, your debt-service to revenue ratio will be lower.”
