The Federal Government spent N643.6 billion on servicing the nation’s domestic debt for January to March, data obtained from the Debt Management Office (DMO) has shown. According to the DMO’s quarterly Debt Data for Quarter one (Q1), posted on its website yesterday, the figure was the total actual domestic debt service for the first three months of the year. The data showed that N239.8 billion was spent on domestic debt servicing in January, N144 billion in February and N259.7 billion in March.
Further breakdown shows that N223.4 billion was interest on Nigeria Treasury Bills/Bonds (NTBs), while N411.7 billion was interest on Federal Government Bonds. The DMO also said the interest on the Federal Government of Nigeria’s Savings Bond stood at N241.8 billion and that of Federal Government’s Sukuk was N8.167 billion. It noted that N279.6 billion of NTBs was re deemed in the first quarter.
In addition, it stated that Nigeria’s public debt stock as at March 31, stood at N22.7 trillion, with external debt of the Federal Government, states and the Federal Capital Territory (FCT) at N6.746 trillion.
It added that domestic debt of the Federal Government stood at N12.5 trillion, while domestic debt of states and the FCT stood at N3.38 trillion.
Further giving a breakdown of the Federal Government’s domestic debt stock by instruments, the DMO said Federal Government Bonds was N8.96 trillion (71.32 per cent), Nigerian Treasury Bonds stood at N175.9 billion (1.40 per cent), while Nigerian Treasury Bills amounted to N3.3 trillion (26.34 per cent).
Others are the Federal Government of Nigeria Savings Bond of N7.780 billion (0.06 per cent), Federal Government of Nigeria Sukuk N100 billion (0.80 per cent) and Green Bond which stood at N10.690 billion (0.08 per cent).
However, despite the huge amount spent on debt servicing, the DMO pointed out that the marginal increase of 4.52% in the country’s total Public Debt to N22.71 trillion, as at March 31, 2018, compared to the figure as at December 31, 2017, shows “that the implementation of the debt management strategy which entails an increase in the External Debt Stock through new external borrowing and the substitution of high cost domestic debt with low cost external debt, is achieving the desired results in several areas.”
The DMO’s primary responsibility is to manage public debt, this it does by introducing initiatives and products to support the development of the domestic market.
Nigeria issues sovereign bonds monthly to support the local bond market, create a benchmark for corporate issuance and fund its budget deficit.
Nigeria’s rising debt profile has been a cause of concern to the International Monetary Fund (IMF) in recent times.
Last month, the Fund warned that despite an overall uptick in economic growth, Nigeria and other countries in sub-Saharan Africa risked a debt distress because of heavy borrowing and gaping deficits.
“What really we’re concerned about is the pace of increase, rather than the average,” IMF Africa Director, Abebe Aemro Selassie, said at the launch of the Fund’s economic outlook for the region.
“What we’re calling for right now is that those countries are going to need to go through fiscal consolidation,” Selassie said.
He added that oil producers and other resource-dependent economies were seeking the sharpest growth in their debt loads.
The IMF said in the report that around 40 per cent of low-income countries in the region are now in debt distress or at high risk of it, adding that refinancing that debt could soon become more costly.
“The current growth spurt in advanced economies is expected to taper off, and the borrowing terms for the region’s frontier markets will likely become less favourable, which could coincide with higher refinancing needs for many countries across the region.
“Borrowing to finance spending is part of the macroeconomic policy tool kits which all countries use. But over the medium, to long-term, they have to rely more on domestic revenues, tax revenues to address their development spending needs,” Selassie said.
It will be recalled that the Federal Government plans to spend N2.014 trillion to service debt in implementing the N9.21 trillion 2018 budget.
But the Minister of Finance, Mrs. Kemi Adeosun, had said that Nigeria’s foreign debt level does not pose any risk to her financial stability and economy.
“The concerns that have been expressed are legitimate; those debt levels are at 55 per cent of GDP which is very high. Nigeria is at less than 20 per cent, so we are not actually one of the countries they are expressing concerns about. However, we will continue to manage our debts very responsibly.
“We are at 20 per cent; we don’t intend to grow it aggressively. The rate of debt accumulation is slowing down as we are replacing debts with revenue and refinancing our debts,” Adeosun had said.