Total debt hits N22.37trn in H1- DMO

The Director-General, Debt Management Office (DMO), Ms. Patience Oniha has said, the nation’s debt stood at N22.37 trillion at the end of June 2018, up three per cent from N21.68 trillion at end of December 2017.

The DMO boss at a brief briefing in Abuja on Tuesday said debt rose after the office issued a $2.5 billion Eurobond in February.

The country’s debt mix is inching towards a target of 40 per cent foreign and 60 per cent domestic, Oniha said, adding that the government was planning to sell N850 billion of debt offshore this year.

The National Assembly needs to approve the new borrowing.

Nigeria, with Africa’s largest economy, is trying to increase its ratio of foreign, dollar-serviced debt to local debt, in a bid to lower costs.

The government paid off about N840 billion worth of local treasury bills in the first half of 2018 instead of rolling it over as it has done in the past, reducing the interest it paid to raise domestic debt, Oniha said.

But it is worthy of note that the Nigeria’s public debt is made up of domestic and External Debt Stock of the Federal government, 36 State Governments and the Federal Capital Territory.

Oniha, however, said that the figure was a marginal increase of 3.01 per cent over the Public Debt Stock for December 2017 and caused by the $2.5 billion Eurobond issued in February 2018.

She said “When compared to the Debt Data for March 2018, the Public Debt Stock actually decreased by 1.44 per cent from N22.71trn in March 2018 to N22.38 tn in June 2018.

“The decrease was due to a 3.38 per cent decline in the federal government’s domestic debt Stock between March and June 2018. There were however marginal increases of 0.07 per cent the External Debt Stock and 2.75 per cent in the Domestic Debt of States.

“Between January and June this year Oniha said the DMO has raised N410bn from domestic bond market to finance the 2018 budget. The four term billion according to her was borrowed out of the N793bn domestic borrowing plan as provided for in the 2018 budget.

How ever she said the external borrowing of N850bn is still undergoing legislative scrutiny adding that once this is approved by the National Assembly the fund would start coming in. Oniha maintained that despite the Nigeria’s high public debt portfolio, it is still within sustainable level.

“One of the beneficial outcomes is the rebalancing of the Debt Stock; the ratio of domestic debt to external debt inching towards the target of 60:40 and the target of 75:25 between long term domestic debt and short term domestic Debt,” she said.

On the high level of state debt, Oniha said DMO adheres strictly to provision guiding borrowing by states. She said, “I don’t think 40 per cent to state’s IGR is high.

By law, state governments are not allowed to borrow more than 40 per cent of their Internally Generated Revenue (IGR) so that they can use the remaining 60 to run their states. “with 60 per cent, states that are prudent can manage well enough. When borrowings are judiciously used, it has positive implications for the economy.

“Again, if borrowings are judiciously used, to improve infrastructure, it will lead to improving the economy of state government. “So, 40 per cent is not the problem, the conditions to meet by states before embarking on borrowing are provided in the Fiscal Sustainable Plan( FSP) launched in 2016.

” She said the activities of DMO, had resulted in lower interest rates for the benchmark federal government securities from about 18.5 per cent in January 2017 to between 11 per cent and 14 per cent in the first half of 2018.

“Also, with the redemption of about N840 bn of Nigerian Treasury Bills, more funds were available for lending by banks to the Private Sector. “External capital raising activities also contributed to the increase in External Reserves,” she added.