Nigeria’s total internal and external debt stock stood at
N12.06 trillion or U$63.5 billion as at the end of March this year, up from
N11.2 trillion or US$67.726 billion in December 2014 according to figure
released by the Debt Management Office (DMO) yesterday.
The rise in the naira
quantum of the outstanding debt is mainly due to the devaluation of the naira
against the dollar.
According to DMO, the
total external debt of the federal and states stood at US$9.464 billion or
N1.864 trillion as against the US$9.711 billion as at December 2014.
Federal Government
domestic debt DMO said stood at US$43.185 billion as at March 2015 against the
figure of N7.9trillion or US$47.05 billion in 2014. This gives a grand total of
US$63.506 billion or N12.06 trillion.
Vanguard report continues:
As at December last year,
the total debt stock of the Federal Government and the 36 states of the
federation including the Federal Capital Territory amounted to N11.243 trillion
or US$67.726 billion.
States and the Federal
Capital Territory as at 31st December 2014 had a domestic debt profile of
N1.707 trillion or US$10.967 billion. Federal Government’s domestic debt, on
the other hand, stood at US$47.05 billion or N7.9 trillion, while those of the
states stood at US$10.97 billion or N1.708 trillion.
Federal Government’s
domestic debt is made up of N5.370 trillion bonds, N2.885 trillion Treasury
bills and N271.2 billion treasury bonds.
But as at June last year,
states in the federation had a domestic debt stock of N1.551 trillion or US$9.963
billion. The Federal Government’s share of the rising external debt then stood
at US$6.363 billion.
Although the DMO did not
show the debt profile of state governments as at March 2015, last year December
profile showed that US$3.146 billion of the debt owed by states were borrowed
from multilateral institutions while US$118.9 million were bilateral loans.
In the case of the
Federal Government, US$3.652 billion were loans sourced from multilateral
institutions while a total of US$2.793 billion were loans obtained from China
Export-Import Bank and the funds the Federal Government raised from Eurobond.
Lagos, Kaduna, Cross
River, others have high external debt profile
The external debt profile
of states has shown that Lagos State has the highest with a profile of US$1.087
billion, followed by Kaduna State with a total of US$234 million.
Cross River State
followed closely with an external debt profile of US$131.469 million. Other
states with relatively large external debt are Edo US$123 million, Ogun US$109
million, Bauchi US$87million, Enugu US$62 million, Katsina US$78 million, Osun US$67
million and Oyo State US$72 million.
The figure announced by
the DMO confirms claims by Vice President Yemi Osinbajo that the country’s debt
stood at some US$60 billion at the end of Goodluck Jonathan’s term, after he
lost to President Muhammadu Buhari in March elections.
FG debt sustainable
The DMO said, however,
that the Federal Government debt is sustainable as its debt sustainability
analysis showed that the debt/GDP ratio was only 2.4 per cent. The bulk of the
Federal Government loans were concessionary with low interests and long
moratorium.
Based on the rising
domestic debt profiles of state governments, the Federal Government last year
directed banks not to grant fresh loans to state governments until they got the
relevant approval and clearance from the Federal Ministry of Finance. The
Federal Government had defended its decision to dissuade banks from granting
unsecured loans to state governments, saying it was to protect the states from
excessive accumulation of debts.
The then Minister of
State for Finance, Bashir Yuguda, had said that the decision was not aimed at
stalling the development efforts of the state governments. The minister said
that most of the states have been experiencing difficulties in servicing their
existing debts and it would not be advisable to allow them take fresh loans.
Debt
profile scary
Yuguda, who was
delivering a lecture entitled: Nigeria’s Economic Policies and Reforms: An
Assessment of the Real and Informal Sectors, said the country’s overall
debt profile, particularly those of the state governments, was scary.
Though he did not provide
specific details then, the minister emphasized the need for the states to
continue to look inwards for other sources of revenue to pursue their
development programmes.
As at December 2013, the
total stock of external debt was US$8.821 billion indicating a rise of US$556
million in the first half of 2014. But as at December 31, 2012, Federal
Government’s external debt was US$4.14 billion as against a total debt stock of
both federal and state governments of US$6.5 billion.
As at June last year,
Federal Government’s borrowing from multilateral institutions amounted to US$3.826
billion while loans from bilateral sources mainly China Exim Bank and Eurobond
amounted to US$2.537 billion.
In the case of states, a
total of US$2.904 billion was sourced from multilateral institutions; US$108.9
million was obtained as loans from bilateral sources, thus making the states’
total outstanding external debt as at June 2013, US$3.013 billion.
Director-General, Debt
Management Office, Dr. Abraham Nwankwo had said last year that although the
debt profile had increased, he assured that the debt remained sustainable at a
ratio of 12.51 to the Gross Domestic Product, GDP. The D-G also said that the
managers of the nation’s debt would apply more caution in further borrowings in
order not to run into the crisis of debt overhang, which the nation once
suffered.
His words at the time: “The
sovereign debt is doing well. Currently, our total sovereign domestic debt for
federal, states and the FCT is about N8.9 trillion and external debt is about
US$9.38 billion. Our current debt/GDP ratio is about 12.51 per cent which is much
lower than the 56 per cent total public to GDP for countries of Nigeria’s
group.”
“However, this is not an
indication that Nigeria can afford to borrow without caution. In spite of the
re-basing which means we have more capacity to borrow, we are not going to
borrow without caution. In fact, we are going to be more cautious, especially
because our Tax:GDP ratio is low. Many economic agents do not pay their taxes.”
Dr. Nwankwo had also said
that the Eurobond initiative which commenced in 2011 with the floating of the
US$500 million Eurobond had positively changed the profiles of Nigerian corporate
organizations and their ability to raise long-term funds from the international
capital market.
The Federal Government
raised additional US$1 billion from the international capital market in 2013
following which several Nigerian firms, especially banks, went to the
international capital market to raise funds for their operations.
According to him, six
companies issued nine bonds within the last one year, from which about US$3.4
billion was raised. The DMO boss said his team would ensure that the funds
raised from the capital markets both at home and outside, were utilised
profitably in the interest of the nation’s economy.
The D-G disclosed that
the funds raised from the Eurobond had been deployed to very critical sectors
of the economy, requiring urgent financing to boost the economy, especially,
the electricity power, agriculture, solid minerals and the dualization of the
Airport and Kubwa roads in Abuja.
Nwankwo said his team had
managed the nation’s debt in line with the national priority needs with a view
to creating full values for funds borrowed in order to ensure maximum benefits
to the economy.
His words: “We have
tailored the nation’s debt management in accordance with our peculiarities. We
have used debt management to leverage development of the private sector and it
has helped them to raise money to boost the real sector such as manufacturing,
solid minerals, agriculture and electricity power supply.
“We have to develop the
capital market to develop long-term debt instrument such that rather than what
the banks have been used to in terms of giving out 91 day loans, we now have
debt instruments of up to 20 years. We have made it possible for the companies
to float their own bonds in the domestic market such that between 2005 and
2013, 23 companies raised N223 billion.
“The implication is that
with operators in the real sector of the economy being able to raise long-term
funds, they can expand their businesses, increase productivity and create more
jobs across the country on a sustainable basis.”
Last August, two
international rating agencies, Standard & Poor’s and Moody had upgraded
Nigeria’s credit rating because of improved financial stability and optimism
over reforms to the banking and electricity sectors. Moody upgraded Nigeria’s
rating assigning local and foreign currency issuer ratings of Ba3 to the
government. Standard and Poor ratings raised its long-term foreign and local
currency sovereign credit rating to BB- with a stable outlook. This is three
points below investment grade, from B+. This brings its view in line with
Fitch’s rating.
The three foremost rating
agencies in the world have all now agreed that Nigeria is managing its
resources better than before.
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