*Emphasises debt stock is sustainable

Web Editor | ConsumerConnect

Nigeria’s total debt stock (domestic and foreign for Federal and state governments) stood at N26.215 trillion as of September, 2019, the Debt Management Office (DMO), Abuja, revealed this Friday, January 17.

Ms. Patience Oniha, Director-General, DMO, at a press briefing said the figure rose by 20 per cent, compared to June 2019 figure of N25.701trillion.

The total debt figure as of September 2019, according to Ms. Oniha, is inclusive of N821.65billion promissory notes, which had been issued to settle Federal Government’s arrears to oil marketing companies and state governments under the promissory programme approved by the Federal Executive Council (FEC) and the National Assembly.

The Nigerian government has come under intense criticisms over spiralling debt stock figure in recent times.

The current government has a pending $30billion loan request before the 9th National Assembly awaiting legislative action.

Specifically, the DMO boss said Nigeria’s debt stock was sustainable. She said: “The ratio of domestic debt to external debt at 69:31 was about the same as at June 2019, which was 68:32, compared to the target of 60:40 in the medium-term debt strategy.

The ratio of long-term to short-term debt in the domestic debt was 80:20 which shows that the target of 75:25 had been outperformed.

“Similarly, total debt as a percentage of GDP was 18.47 per cent as of September 2019, and was well within the limit of 25 per cent 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 per cent 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 per cent respectively when compared to Nigeria’s 51 per cent in 2017.”

The DMO boss also unveiled plans for 2020, based on the new borrowings in the 2020 Appropriation Act, which comprises N744.99billion for domestic borrowings.

“The new domestic borrowings will be raised through Federal Government 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,” Oniha disclosed.

She explained that the level of new borrowings in the Appropriation Acts declined consistently since Nigeria exited the recession in 2017.

Whereas she reiterated that the increase in the new borrowings in the Appropriations Acts between 2015 and 2017 was due to the need to stimulate growth and create jobs in the economy as contained in the Economic Recovery Growth Plan (ERGP).

She pointed out that while the 2019 Appropriation Act provided for a total new borrowing of N1, 605.63billion 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 DMO boss expressed joy that the government had focused strongly on growing revenue, which the Finance Bill recently passed into law seeks to achieve.

“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, Budget and National Planning should thus be supported,” she added.

She listed DMO’s achievements for 2019 to include the issuance of a 30-year FGN bond for the first time.