Nigeria’s Total Debt Stock Grows To N24.3 Trillion — DMO

The Debt Management Office (DMO) has announced Nigeria’s total debt stock comprising external and domestic debts stand at N24.387 trillion.

Director General of the DMO Ms. Patience Oniha made this disclosure at the public breakdown of the nation’s public debt data in Abuja on Thursday.

According to Oniha: “the Total Public Debt stood at N24.387 trillion or USD79.437 billion as at December 31, 2018 representing a year-on-year growth of 12.25%.

From the breakdown, it was revealed that the FGN External Debt in 2018 was N6. 460 trillion up from N4.527 trillion representing a 42.69% increase.

“The FGN Domestic Debt in 2018 on the other hand was N12,774 trillion up from N12,589 trillion the previous year representing a 1.46% increase.

“The sum of both external and domestic FGN debts was put at N19,234 trillion while the total sum of the external and domestic debt stock of the 36 states and the Federal Capital Territory (FCT) was put at N5,152 trillion broken down as N3,853 trillion domestic debts and N1,298 trillion external debts.”

The DMO boss further stated: “Progress was made towards achieving the target Debt Stock mix of 60% (Domestic) and 40% (External). The share of Domestic Debt dropped to 68.18% from 73.36% as at December 31, 2017 thereby achieving a Mix of 68.18% and 31.82% in the Debt Stock.

“The DMO strategy of using relatively cheaper and longer tenored external funds is achieving the expected objectives.

“Some of the objectives were: to create more space for other borrowers in the domestic market, extend the average tenor of the debt stock in order to reduce refinancing risk and increase External Reserves.”

The implementation of the strategy led to an injection of N855 billion through the redemption of Nigerian Treasury Bills in 2018 and a general drop in the FGN’s borrowing rate in the domestic market from over 18% p.a. in 2017 to 14 – 15% p.a. in 2018.

With regards to the N3.4 trillion Promissory Notes Issuance to Settle Inherited Local Debts, Oniha disclosed that the purpose is to use it to settle Inherited Local Debts and Contractual Obligations of the Federal Government.

The programme, which is estimated at N3.4trillion, Oniha said covers: Contractors; Exporters; Judgement Debt; State Governments and Oil Marketing companies.

The features of the promissory notes to be issued are that it will serve as Sovereign and negotiable Instruments and also have Liquid Asset Status.

The DMO boss stated the FGN’s Domestic Debt Stock includes N331.12 billion Promissory Notes issued to Oil Marketing Companies and State Governments in December 2018.”

The benefits of issuing the promissory noted the DMO boss stated include: “it will provide stimulus to the economy and unlock investment across a number of sectors currently having liquidity issues; Positive impact on the non-performing loan ratios of banks which will in turn, increase the banks capacity to lend; Enable the Federal Government to formally recognise and account for its true liabilities in line with the International Public Sector Accounting Standards (IPSAS).”

Some of DMO’s major plans in 2019 are to undertake more of project-tied borrowing and access more external borrowing from Concessional Sources. Furthermore, the DMO announced plans to issue 30-year Federal Government of Nigeria Bonds (FGN Bonds) for the first time.

“The issuance of the Bond Oniha said: “will meet the needs of annuity funds and other long term investors while also developing the domestic capital market and reducing the re-financing risk of the FGN.”

Another area of focus in 2019 will be the management of Risks associated with the Debt Stock to mitigate Debt Service Costs.”

In 2019, Budget Deficit was put at N1. 859 trillion but new borrowings, if passed by the National Assembly have been put at N1.649 trillion.

By this development, the percentage of Deficit to be Funded by Borrowing in 2019 will 88.7 0%.

According to Oniha: “the New Borrowing in 2019 (subject to NASS Approval) will be a 50-50 split for Domestic and External both at N824 billion. The domestic borrowing component also known as FGN Bonds, will sourced from Sukuk, Green Bond and Savings Bond while the external (N824 billion) will be largely Concessional, Cheaper and will help reduce Debt Service Cost. Longer-term funds for infrastructure, used to create space for private sector borrowing and Increase External Reserves

Patience Oniha also explained: “Proceeds of the USD500 million Eurobond raised in November 2017 and USD2.5 Billion were used to redeem the N198.032 billion of Nigerian Treasury Bills (NTBs) that matured in December 2017.

“Also, USD2.5 billion Eurobond Proceeds (February 2018) were used to redeem N729.95 Billion Nigerian Treasury Bill (NTB) in 2018.”