Nigeria’s total debt profile under the leadership of President Muhammadu Buhari, has increased by 25 per cent to N21.7 trillion at the end of December 2017, the Debt Management Office (DMO) revealed yesterday. The nation’s public debt was N17.36 trillion at the end of 2016.
This means that within a period of 30 months – July 2015 to December 2017 – the country’s debt rose by N9.61tn, or 79.25 per cent.
In a statement made available to newsmen in Abuja on Wednesday, the DMO said the composition of the debt stock as of the end of 2017 showed that external debt was 26.64 per cent of the portfolio, up from 20.04 per cent in 2016; while the domestic debt was 73.36 per cent, down from 79.96 per cent in 2016.
Further analysis showed that the domestic debt for the Federal Government was N12.59tn, while the domestic debt of the states and the Federal Capital Territory was N3.35tn.
The external debt of the Federal Government, states and the FCT was N5.79tn. This puts the total public debt as of December 31, 2017 at N21.73tn.
According to the DMO, the restructuring of the country’s debt mix has led to an increase in foreign debt in order to minimise the high interest rates of local debts.
The DMO said, “The key benefits of the restructuring of the portfolio are the reduction of the government’s debt service costs, lowering of interest rates in the domestic market and improved availability of credit facilities to the private sector.
“We repaid N198bn Nigerian Treasury Bills in December 2017 with the proceeds of Eurobond issuances and we have continued further implementation of the strategy in 2018, with the issuance of the $2.5bn Eurobonds in February 2018, the proceeds of which is being used to repay maturing domestic debt, starting with N130bn NTBs repaid on March 1, 2018.”
According to the DMO, the borrowings are for financing capital expenditure and stimulating the economy.
The funds injected through the borrowings strongly supported the implementation of the Federal Government’s budget, which helped the country to exit recession in 2017, the agency stated.
It added that the total public debt as of December 31, 2017 represented 18.2 per cent of the country’s Gross Domestic Product for the year.
This shows that Nigeria’s debt continues to be sustainable and is well within the threshold of 56 per cent for countries in her peer group, the DMO said.
Speaking at a press conference to explain the debt status, the Director-General, DMO, Patience Oniha, said the debt grew because the nation went into recession and the government could not abandon the economy but had to spend.
She added that the current government had been spending more on infrastructure than other administrations in the past, adding that any foreign borrowing had to be tied to a project.
Oniha explained that it was necessary for the government to borrow to rebalance its portfolio such that domestic debts that had higher interest rates needed to be reduced with foreign debts at lower interest rates.
She said, “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.
“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.