The Debt Management Office (DMO) on Wednesday released the country’s debt profile, which stood at N21.725 trillion as at last December 31, representing 18.20 per cent of its Gross Domestic Product (GDP).
Out of the figure, the Federal Government’s domestic debt was put at N12.589 trillion, while domestic debt owed by the states and the Federal Capital Territory (FCT) was N3.348 trillion.
On the other hand, external debt attributed to the Federal Government, States and the FCT was N5.787 trillion, making it a gross total of N21.725 trillion.
The Director General of the DMO, Patience Oniha, who disclosed this at a briefing in Abuja, also said the proceeds of $2.5 billion Eurobond, issued last month, was being used to pay maturing domestic debt, starting with N130 billion Nigeria Treasury Bills (NTBs), repaid on March 1.
According to her, “the figures show that Nigeria’s debt management strategy, which has the objective of reducing the ratio of domestic debt in the portfolio, while the ratio of external debt is increased with a target of 60 per cent domestic and 40 per cent external, is being achieved.
“The composition of the debt stock as at the end of 2017 showed that external debt was 26.64 per cent of the portfolio, up from 20.04 per cent in 2016, while domestic debt was 73.36 per cent, down from 79.96 per cent in 2016.
On the anxiety that Nigeria is being lured into a debt trap again, the DMO boss dismissed such fear, explaining that the nation’s debt to GDP is still within approved limits.
“Nigeria’s debt continues to be sustainable and it is well within the threshold of 56 per cent for countries in Nigeria’s peer group.
She, however, advised that more emphasis should be made raise revenues and exports to strenghten foreign exchange earnings.
“From analysis, we’ve large informal sector in the country. Some companies and high networth individuals are not paying the right taxes. And it’s good the government is addressing that. We need to look beyond oil revenue. We have been too dependent on it.
“The Federal Government won’t be boxed into a corner in terms of our debt.
“Again, let’s ask ourselves, what is the borrowing used for? For economic growth and that is why we have more capital spend. So, we borrowed for financial capital expenditure and stimulating the economy.
“The funds injected through the borrowings strongly supported the implementation of the Federal Government’s budget, which helped the country to exit recession”, she explained.
Oniha said the restructuring of the country’s debt portfolio has led to the reduction of debt service costs, lowering of interest rates in the domestic market and improved availability of credit facilities to the private sector.
“The DMO repaid N198 billion NTBs in 2017 with the proceeds of Eurobond issuances”, she noted.
Oniha said the government’s penchant for foreign loans was because they are usually cheaper, with longer gestation periods and best for long-term capital projects. She said the government usually scrutinised the terms of engagements before going into any deal with offshore lenders.
“For now, if you noticed, we are having deals with the Chinese because they are for capital projects which we need. It is about what is best for us”, she noted.
-Sun