The Director General of the Debt Management Office (DMO) has announced that Nigeria’s public debt stock has risen from N41.60 trillion ($100.07 billion) in March 2022 to N42.84 trillion ($103.31 billion) by June 2022. According to a statement published on the DMO’s official website, the debt represents the domestic and external debt stocks of the Federal Government (FG), the 36 State Governments and the Federal Capital Territory (FCT). The agency maintained that while the foreign part of the debt remained at the same level of N16.61 trillion ($39.96 billion), the local component increased to N26.23 trillion ($63.24 billion).
Media had reported that as of March 30, 2020, the local component of Nigeria’s borrowings was N24.98 trillion ($60.1 billion). The agency said that a larger percentage of the external debts were concessional and semi-concessional loans. It is estimated that at least 50 percent of all the external loans were concessional or semi-concessional. These loans were obtained from multilateral lenders such as the World Bank, the International Monetary Fund (IMF), Afrexim and African Development Bank, and bilateral lenders including Germany, China, Japan, India and France.
Nigeria’s public debt has been consistently rising for the past five years.
A concessional loan is a loan which is obtained by more favorable terms than the borrower could obtain in the marketplace. The concessional terms may be one or more of a lower interest rate (below the most common), deferred payments, and income-contingent repayments. However, these loans are still loans and the lenders expect the Government of Nigeria to repay them according to the terms and conditions of the loan. Concessional loans are given to support or subsidize the borrower.
This may have been the reason why Nigeria’s public debt has been consistently rising for the past five years. In 2019, Nigeria’s debt profile was N27 trillion. It increased to N32 trillion in 2020 by at least N5 trillion. In 2021, it made a huge leap to N39 trillion by a N7-trillion margin. And as of June, 2022, Nigeria owes a total debt of N42.84 trillion. Two factors contribute to this steady rise. The first is the devaluation of the naira, which means that while the debt may have remained the same in two consecutive years, the rise in the price of dollar will increase its equivalent in naira. The second is that the government keeps borrowing every year while servicing some.
The DMO insists that debt-to-GDP ratio is still within limits.
The agency said that the total domestic debt stock increased from N24.98 trillion ($60.1 billion) in March 2022 to N26.23 trillion ($63.24 billion) in June of the same year. “This is due to new borrowings by the Federal Government to part-finance the deficit in the 2022 Appropriation (Repeal and Enactment) Act as well as new borrowings by state governments and the FCT,” the agency said. They also insist that the total public debt-to-GDP ratio remained within limits (at 23.06 percent) while debt-service-to-revenue was still high.
It was added that the Federal Government was committed to increasing revenue to reduce debt servicing. The debt-to-GDP ratio as of June 30, 2022 was 23.06 percent. Compared to the ratio of 23.27 percent as of March 30, 2022, it has remained within Nigeria’s self-imposed limit of 40 percent. The agency said that as the Federal Government continues to execute revenue-generating initiatives in the non-oil sector and to block leakages in the oil sector, the debt-service-to-revenue ratio remains high.
The DMO to take Security Awareness Program to Yola and Umuahia.
Meanwhile, the DMO is ready to take its FGN Security Awareness Program to Yola on September 28, 2022, and to Umuahia on September 29, 2022. According to the agency’s Director-General, Patience Oniha, the program is designed to sensitize Nigerians on the huge investment benefits in federal government securities. This is in order to promote and boost financial inclusion. The president, Muhammadu Buhari, has been statistically named the president with the most borrowings in the history of the Fourth Republic of Nigeria. Nigeria’s domestic debt rose from N8.93 trillion in 2015 to N19.24 trillion in December 2021. In the same vein, Nigeria’s external debt rose from $10.32 billion in 2015 to $33.62 billion in December 2021.
Related Link
Debt Management Office Nigeria: Website
