Nigeria’s public debt jumps 12.25% to N24.387 trillion, plans to issue 30 year FGN Bonds

WorldStage Newsonline– Nigeria’s total public debt shot up to N24.387 trillion as at December 31, 2018 representing a year on year growth of 12.25%, according to the Debt Management Office (DMO) .

Director General of the DMO Ms. Patience Oniha said at the public breakdown of the nation’s public debt data in Abuja on Thursday that “The FGN Domestic Debt in 2018 on the other hand was N12,774 trillion up from N12,589 trillion the previous year representing a 1.46% increase.

“The sum of both external and domestic FGN debts was put at N19,234 trillion while the total sum of the external and domestic debt stock of the 36 states and the Federal Capital Territory (FCT) was put at N5,152 trillion broken down as N3,853 trillion domestic debts and N1,298 trillion external debts.”

According to Oniha: “the New Borrowing in 2019 (subject to NASS Approval) will be a 50-50 split for Domestic and External both at N824 billion. The domestic borrowing component also known as FGN Bonds, will sourced from Sukuk, Green Bond and Savings Bond while the external (N824 billion) will be largely Concessional, Cheaper and will help reduce Debt Service Cost. Longer-term funds for infrastructure, used to create space for private sector borrowing and Increase External Reserves.”

Further details provided in the report showed that more progress was made towards achieving the target debt stock mix of 60% domestic and 40% external. 

According to the report, the share of domestic debt dropped to 68.18% from 73.36% as at December 31 2017, there by achieving a mix of 68.18% and 31.82% in the debt stock. 

The DMO boss noted that the strategy of using relatively cheaper and longer tenored external funds is achieving the expected objectives.

He said some of the objectives were 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. 

Oniha said, the implementation of the strategy led to an injection of N855 billion through the redemption of Nigeria Treasury Bills in 2018 and a general drop in the federal government borrowing rate in the domestic market from 18% p.a. 2017 to 14-15% p.a. in 2018. 

He however,noted that the federal government domestic debt stock included N331.12 billion Promissory Notes issued to Oil Marketing Companies and State Governments in December 2018.

Meanwhile, the DMO announced plans to issue 30 year Federal Government of Nigeria Bonds for the first time, adding that issuance will meet the needs of annuity funds and other long term investors while also developing the domestic capital market and reducing the refinancing risk of the Federal Government of Nigeria. 

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