Debt Management Office (DMO) Director-General Patience Oniha, speaking yesterday in Abuja on the country’s Debt Management Strategy (DMS), said the Federal Government’s domestic debt at the end of 2017 was N12.589 trillion. The 36 states and the Federal Capital Territory (FCT) have a domestic debt overhang of N3.348 trillion.
The combined external debt of the Federal Government and the states is N5.787 trillion.
The new DMS, Oniha said, has brought about the restructuring of the debt portfolio, which “has resulted in reduction of debt servicing costs, lowering interest rates in the domestic market and an improved availability of credit facilities to the private sector.” The recent spate of borrowings the DMO boss said, is essentially “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 figures showed that Nigeria’s Debt Management Strategy is achieving its objective of reducing the ratio of Domestic Debt in the portfolio, with a target of 60% Domestic and 40% External, .
The composition of the Debt Stock as at the end of 2017 showed that External Debt was 26.64% of the portfolio, up from 20.04% in 2016. Domestic Debt was 73.36%, down from 79.96% in 2016.
The key benefits of the restructuring of the portfolio, Oniha explained “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”. ”The DMO repaid N198 billion Nigerian Treasury Bills in December 2017 with the proceeds of Eurobond issuances and the DMO has continued further implementation of the strategy in 2018, with the issuance of the USD2.5 billion Eurobonds in February 2018, the proceeds of which is being used to repay maturing domestic debt, starting with N130 billion NTBs repaid on March 1, 2018.”
“The Total Public Debt as at December 31, 2017 represents 18.20% of Nigeria’s GDP for 2017. This shows that Nigeria’s debt continues to be sustainable and is well within the threshold of 56% for countries in Nigeria’s peer group,” Oniha stated.
Ms. Oniha assured Nigerians that the most important consideration for these borrowings was that the proceeds were being prudently applied to bridge infrastructure gaps occasioned by the decline in revenues.
She also promised that “the rate of increase of debt servicing would reduce, going forward, given the Federal Government’s attention to raise revenue through the Voluntary Assets and Income Declaration Scheme (VAIDS), as well as targeted efforts to increase local production of some of the goods responsible for high foreign exchange demand”.
When asked to react to the advice by America’s former Secretary of State Rex Tillerson that Nigeria should be wary of Chinese loans, the DMO boss said that Chinese loans were being to provide specific infrastructure projects, such as railways and re-modeling of various airports.
She also noted that Nigeria borrows from other countries , such as Japan, France, India and Germany, “based on Nigeria’s needs, interests and conditions considered favourable to the nation”.
Mrs Pniha said: “If the Americans have any offer, it should be put on the table. It is not about de-marketing China.”
WHO OWES WHAT
N12.589tr —Federal Government’s domestic debt at the end of 2017
N3.348tr —The 36 states and the FCT domestic debt overhang
N5.787tr—The combined external debt of the FG and the states