ONIHA-PATIENCE
N2.66tn increase is recorded in Nigeria debt currently. As at December 31, 2018 stands at N24.387tn. this increased by 12.25% from N21.725tn in 2017 to N24.39tn in 2018 as reported by debt office.
The statistics provided by DMO in Abuja showed that this increase is recorded between 2017 and 2918.
According to DMO, the year-on-year growth of public debt show a 12.25 per cent within the one-year period.
The Director General of DMO, Patience Oniha said at a press briefing in Abuja, that the funds were borrowed to fund projects, to finance budget deficit and to refinance maturing obligations. She also said some foreign debt was used to refinance treasury bills because of the short tenor of the bills. She added that borrowing from abroad also helps to stabilise the local currency in the last two years.
According to her the domestic debt stock of the Federal Government included N331.12bn promissory Notes issued to oil marketing companies and state governments in December 2018. Some targets that had been set in the county’s Debt management strategy were achieved and nearly achieved. The plan to achieve a tenor 75:25: ratio in favour of long tenor debts was achieved.
Patience Oniha, “The share of domestic debt dropped to 68.18 per cent from 73.36 per cent as of December 31, 2017, thereby achieving a mix of 68.18 per cent and 31.82 per cent in the debt stock.”
The DMO’s strategy of using relative cheaper and longer tenured external funds is being achieved as expected. The objective to create more space for other borrowers in the domestic market, extend the average tenor of the debt stock in order to reduce refinancing risk and increase external reserves.
“The implementation of the strategy led to an injection of N855bn through the redemption of Nigerian Treasury Bills in 2018 and a general drop in the FGN’s borrowing rate in the domestic market from over 18 per cent per annum in 2017 to 14 to15 per cent per annum in 2018,” Oniha said.
The 2019 borrowing will be split 50-50 between domestic and foreign sources. This is a strive to be consistent with the Debt Management Strategy 2013-2019 aimed at achieving a 60-40 ratio between domestic debt and external debt.
The DMO also announced plans to issue 30-year FGN Bonds for the first time.
On the issue of Promissory notes, Oniha said, “Federal Executive Council approved the establishment of a Promissory Note Programme. The purpose is to use it to settle inherited local debts and contractual obligations of the Federal Government. The programme is estimated at N3.4tn. It will provide stimulus to the economy and unlock investment across a number of sectors currently having liquidity issues.
She said that this will enable Federal Government recognise its true liabilities and account for them in line with the International Public Sector Accounting Standards.
SOURCE: https://punchng.com/nigerias-debt-hits-n24-39tn-rises-by-n2-66tn-in-one-year/