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Nigeria’s Total Public Debt Still Sustainable, Hits N26.215 Trillion, Says DMO

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DMO Director General, Patience Oniha

By CLEMENT NWOJI, Abuja

The Debt Management Office (DMO), has disclosed that Nigeria’s total public debt stock as at September, 2019, stood at N26.215 trillion.

This is inclusive of the debts incurred by the Federal Government, 36 States of the Federation and the Federal Capital Territory (FCT) Abuja.

The Director General of DMO, Patience Oniha, made these disclosures in Abuja at Interactive Sessions with Journalists during which, she presented a review of the agency’s activities and its plans for raising capital from domestic and external sources in the year 2020.

She explained that the level of New Borrowings in the Appropriation Acts declined consistently since Nigeria exited the recession in the year 2017.

The DMO Director General said: “The comparative figure for September 2018 was N25.701 Trillion which implies that in the 12 months period to September 2019 the Total Public Debt grew by 16.88%.

“The Total Public Debt as at September 2019 includes Promissory Notes in the amount of N812.650 billion which had been issued to settle the FGN’s arrears to Oil Marketing Companies and State Governments under the Promissory Programme approved by the Federal Executive Council and the National Assembly.

“Whereas the 2019 Appropriation Act provided for a total New Borrowing of N1, 605.63 Billion split equally between Domestic and External, only the domestic component of N802.82 Billion was raised due to the late passage of the 2019 Appropriation Act and the expectation that the implementation of the 2020 Budget would commence on January 1, 2020.

“The Ratio of Domestic Debt to External Debt at 69:31 as at September 2019 was an improvement over the Ratio of 71:29 as at September 2018 compared to the target of 60:40 in the Medium-Term Debt Management Strategy.

“The Ratio of Long Term to Short Term Debt in the Domestic Debt as at September 2019 was 80:20, which shows that the target of 75:25 had been outperformed by September 2019.

“Furthermore, it was an improvement over the Ratio of 73:23 recorded in September 2018.

“Similarly, Total Debt as a percentage of GDP was 18.47% as at September 2019 was well within the limit of 25% and fares better in comparison with the Debt/GDP ratios of countries such as the United States of America, United Kingdom and Canada with ratios of 105%, 85% and 90% respectively for the same period.

“However, because they generate adequate revenues, their Debt Service/Revenue Ratios for the same period were much lower at 12.5%, 7.5% and 7.5% respectively when compared to Nigeria’s 51% in 2017

“The low revenue base of Nigeria relative to its GDP is clearly reflected in the high Debt Service to Revenue Ratio. This clearly brings to fore, the need for revenues to grow.

“The efforts towards increasing and diversifying revenue such as the passage of the Finance Act and Strategic Revenue Growth Initiative of the Federal Ministry of Finance”.

Oniha enumerated some of the achievements of the DMO in 2019 which include among other things, the issuance of a 30-year FGN Bond for the first time; introduction of the 30-year Bond which was to meet the investment needs of long-term investors such as insurance companies and support the development of the domestic financial markets in areas such as mortgages.

She noted that from the FGN perspective, the 30-year Bond also contributed to reducing the refinancing risks of the Public Debt Stock.

The product has enjoyed a strong demand as N284.391 billion had been issued by the end of September 2019.

The DMO also unveiled its plans for the year 2020, based on the New Borrowings in the 2020 Appropriation Acts, which comprises of N850 billon and N744.99 billion for External and Domestic Borrowings respectively.

She explained that the New Domestic Borrowings will be raised through FGN Bonds, Sukuk, FGN savings Bonds and possibly Green Bonds.

“For External Borrowings the strategy is to first seek out concessionary and semi concessionary loans due to the lower interest rate and longer tenors. Any shortfall thereafter may be raised from commercial sources”, she said.

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