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| Minister of Finance, Mrs. Kemi Adeosun |
The nation’s total indebtedness to foreign and local
creditors now stands at N19.16tn, the Debt Management Office has said. This is
N1.8tn increase from the N17.36tn recorded at the end of December 2016.
As of March 31, 2015, the country’s total debt stood at
N12.06tn. This means the debt level increased by N7.1tn in two years.
Segmenting the national debt, the DMO put the Federal
Government’s domestic debt at N11.97tn. Two years ago, as of March 31, 2015,
this component of the debt burden stood at N8.51tn.
This means that within a period of two years, the Federal
Government has borrowed a total of N3.46tn from domestic creditors. This shows
that the domestic debt of the Federal Government has increased by 40.71 per
cent.
In the same period, the country’s external debt (for the
federal and state governments) rose from $9.46bn to $13.81bn. This means that
within the two-year period, the country’s external debt rose by $4.35bn or
45.98 per cent.
The external debt component, however, has been affected by
exchange rate variations as the last two years have witnessed noticeable
changes in foreign exchange rates.
According to the DMO, the official exchange rate of N306.35
to $1 was used in calculating the country’s external debt for March 31, 2017,
while the official rate of N197 to $1 was used in determining the foreign debt
for March 31, 2015.
The domestic debt component of the states stood at N2.96tn
as of March 31, 2017, up from the figure of N1.69bn at the same time in 2015.
This means that within the period of two years, the domestic
debt of the states rose by N1.27tn or 75.15 per cent.
Amidst drying revenues from oil and gas, the government has
in the last two years increasingly depended on borrowing even to carry out
routine responsibilities.
Although foreign debts are accounted as cheaper than
domestic debts, the government has increasingly depended on domestic sources of
borrowing as foreign donors place more stringent conditions before granting credit
facilities to the government.
To raise the required funds from the domestic debt market,
the Federal Government has been active in the market with a number of
instruments, including FGN Bonds and the Nigeria Treasury Bill. It recently
floated a new instrument known as the FGN Savings Bond.
The International Monetary Fund had recently projected that
Nigeria’s indebtedness would climb to 24.1 per cent of the nation’s Gross
Domestic Product by 2018. It said that the country’s current indebtedness would
have reached 23.3 per cent of the GDP by the end of 2017.
The country closed 2016 with a debt to GDP ratio of 18.6 per
cent. By the end of 2015, Nigeria’s debt to GDP ratio stood at 12.1 per cent,
according to the Bretton Wood institution.
Nigeria’s GDP for the year ended December 31, 2016 stood at
N67.98tn, according to the National Bureau of Statistics.
Going by the projection of 24.1 per cent for 2018, within
three years, the nation’s debt to GDP ratio would have gone up by 100 per cent,
from 12.1 per cent in 2015.
Although Nigeria’s debt to GDP ratio is considered among the
lowest in Africa, some experts have expressed worries about the increase in
debt accumulation in recent years, while others are worried about the quality
and utilisation of the debts.
The World Bank
recently expressed concern over the debt servicing to revenue ratio, saying
that reduced earnings might render the country’s debt unsustainable. A total of
N1.84tn was provided in the 2017 budget for debt servicing.
Nigeria’s debt profile is dominated by local debts, which
are characterised by high interest rates. Efforts are being made to secure more
foreign debts and reduce the exposure of the Federal Government to the domestic
debt market.
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