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+---- Thread: DMO: Nigeria’s debt stock hits N21.17trn (/showthread.php?tid=4358)
DMO: Nigeria’s debt stock hits N21.17trn - Edoman - 03-15-2018
![[Image: Oniha.png]](https://newtelegraphonline.com/wp-content/uploads/2018/03/Oniha.png)
Nigeria’s total debts – domestic and foreign – as at last December, rose to N21.725 trillion, the Debt Management Office (DMO) said yesterday. It was N17.36 trillion at the end of 2016, translating to a leap of N4 trillion within one year.
Of the total debt stock, Federal Government’s domestic debt at the end of 2017 was N12.589 trillion, while states and the Federal Capital Territory (FCT) owed domestic debt, amounting to N3.348 trillion. Director General DMO, Ms Patience Oniha, disclosed these in Abuja while briefing newsmen on the Debt Management Strategy.
The total external debt of both the Federal Government and states was an equivalent of N5.787 trillion.
Oniha noted that borrowings help in “financing capital expenditure and stimulating the economy.
“The funds injected through the borrowings strongly supported the implementation of the Federal Government’s Budget, which helped the country to exit recession in 2017,” she said.
Oniha said the adoption of Debt Management Strategy by DMO led to restructuring of debt portfolio in such a way that has resulted in reduction of debt servicing costs, lowering interest rates in the domestic market and an improved availability of credit facilities to the private sector.
The DMO boss said that the $3 billion Eurobond has resulted in an annual savings of about 81.66 per cent in debt servicing, as the Eurobond was secured at about seven per cent interest, compared to about 15 or 16 per cent interest on domestic borrowings.
“DMO repaid N198 billion Nigerian Treasury Bills in December 2017 with the proceeds of Eurobond issuances and that it has continued further implementation of the strategy in 2018, with the issuance of the $2.5 billion Eurobonds in February 2018, the proceeds of which is being used to repay maturing domestic debt, starting with N130 billion NTBs repaid on March 1, 2018.”
Part of the DMS was to reduce the ratio of domestic debt in the portfolio, while the ratio of external debt is increased – with a target of 60 per cent domestic and 40 per cent external.
The composition of the debt as at the end of 2017 showed that external debt was 26.64 per cent of the portfolio, up from 20.04 per cent in 2016, while domestic debt was 73.36 per cent, down from 79.96 per cent in 2016.
On why the Federal Government resorted to borrowing, she said that the central government had to borrow because of the decline in revenue.
“If you look at Abuja, apart from some other parts of Nigeria, there’s a lot of work going on. You can see infrastructure happening. You can’t build a major road in six months, it’s usually over a period of time,” she explained.
However, she gave assurance that the most important consideration was the fact that the proceeds were being prudently applied to bridge infrastructure gaps.
She said that the rate of increase of debt servicing would reduce, going forward, given the Federal Government’s attention on raising revenue through the Voluntary Assets and Income Declaration Scheme (VAIDS), as well as targeted efforts to increase local production of some of the goods responsible for high foreign exchange demand.
“Rice is a good story and we can replicate the rice story in other sectors. As we reduce imports and increase exportation of goods, we will readily build our external reserves,” she said.
Meanwhile, the DMO said Nigeria’s borrowings were from different countries and not restricted to a particular nation.
The DG made the clarification against the backdrop of recent advice by America’s out-going Secretary of State, Rex Tillerson, while in Nigeria.
Tillerson had said that Nigeria should be wary of China loans.
Responding, Oniha said Nigeria’s borrowings were from various countries, including China, Japan, France and India, as well as Germany.
She said each borrowing was predicted based on Nigeria’s needs, interests and conditions considered favourable to the nation
For instance, she explained, China loans were being used in specific infrastructure projects such as railways and remodelling of various airports.
“In all of these, we look at Nigeria’s interests and we ensure that the offers are favourable. If the Americans have any offer, it should be put on the table. It is not about de-marketing China,” she said.