The collective borrowing of Nigerian governments – the federal, states and FCT rose to N26.215 trillion as at 30th September, 2019, the Debt Management Office (DMO) has said.
The comparative figure for September 2018 was N25.701Trillion which implies that in the 12 months period to September 2019, the Total public debt grew by 16.88%.The
DMO also stated that the Total public debt as at September 2019 includes Promissory Notes in the amount of N812.650 billion which had been issued to settle the FGN’s arrears to oil marketing companies and state governments under the Promissory Programme approved by the Federal Executive Council and the National Assembly.
Addressing journalists in Abuja yesterday, director-general of the debt office, Ms. Patience Oniha, said although the 2019 Appropriation Act provided for a total New Borrowing of N1,605.63 billion split equally between Domestic and External, only the domestic component of N802.82 Billion was raised due to the late passage of the 2019 Appropriation Act and the expectation that the implementation of the 2020 Budget would commence on January 1, 2020.
According to data that was released by the DMO, Nigeria’s total debt to GDP was at 18.47% as at September. The limit is 25%. Average tenure of the portfolio is 11.62%. “We have exceeded the target,” Oniha stated.
The increase in total public debt between June and September 2019 is marginal – at 2%.
“This is the time to look for Public-Private Partnerships because it will reduce the need for governments to borrow if we have private sector operators actively involved to finance some government projects. We also need to diversify the economy,” Ms. Oniha said.
The DG said government will issue another Sukuk Bond to raise the money. The DMO has the approval to issue Sukuk Bonds up to N150 billion in 2020 for the rehabilitation of 44 roads across the country as opposed to the 25 roads that was done in 2017 and 28 in 2018.
The DMO stated amongst others, that the level of New Borrowings in the Appropriation Acts declined consistently since Nigeria exited the recession in the year 2017. It also reiterated the fact that the increase in the New Borrowings in the Appropriations Acts between 2015 and 2017 was due to the need to stimulate growth and create jobs in the economy as contained in the Economic Recovery Growth Plan (ERGP).
Amongst the highlights of the DMO’s achievements for 2019 was the issuance of a 30-year FGN Bond for the first time. The introduction of the 30-year Bond was to meet the investment needs of long-term investors such as insurance companies and support the development of the domestic financial markets in areas such as mortgages. From the FGN perspective the 30-year Bond also contributed to reducing the refinancing risks of the public debt stock. The product has enjoyed a strong demand as N284.391 billion had been issued by the end of September 2019.
The Ratio of Domestic Debt to External Debt at 69:31 as at September 2019 was an improvement over the Ratio of 71:29 as at September 2018 compared to the target of 60:40 in the Medium-Term Debt Management Strategy. The Ratio of Long Term to Short Term Debt in the Domestic Debt as at September 2019 was 80:20, which shows that the target of 75:25 had been outperformed by September 2019. Furthermore, it was an improvement over the ratio of 73:23 recorded in September 2018.