Nigeria’s public debt hits N21. 7trn in 2017

The Nigeria’s total public debt as at end of 2017, stood at N21.725 trillion, while the composition of the Debt Stock at the same period showed that External Debt was 26.64 per cent of the portfolio, up from 20.04 per cent in 2016, data obtained from the Debt Management Offices (DMO) has revealed.

The figures from the debt office showed that Domestic Debt was 73.36 per cent, down from 79.96 per cent in 2016, representing a drop of 6.6 per cent. The DMO, however, plans to achieve a debt mix of 60 per cent and 40 per cent for domestic and external debt respectively.

It also plans to increase the long-term portion of the domestic debt to 75 or cent. But the statistis, further indicated that Nigeria’s Debt Management Strategy, which has the objective of reducing the ratio of Domestic Debt in the portfolio, while the ratio of External Debt is increased – with a target of 60% Domestgroups ic and 40% External, is being achieved.

The DMO, explained that 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.

In December 2017, the nation’s debt managers on behalf of the federal government repaid N198 billion Nigerian Treasury Bills with the proceeds of Eurobond issuances.

Although, 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 figures released showed that Domestic Debt for the Federal Government was N12.589 trillion, while the Domestic Debt of States and the FCT was N3.348 trillion.

The External Debt of the Federal Government, States and the FCT was N5.787 trillion. It should be noted that the borrowings were 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 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. Analysts from FSDH Research, notes that the current strategies of the Debt Management Office (DMO) to reduce the interest expense on the debt of the Federal Government of Nigeria (FGN) is working.

The latest debt figures show that the interest expense on the local debt have dropped in the last few months. FSDH Research observed a relative increase in the revenue accrued to the FGN from the Federation Account Allocation Committee (FAAC). These two factors have led to a drop in the ratio of the interest expense to the FAAC revenue which stood at 20 per cent in December 2017.