The Debt Management Office of Nigeria (DMO) announced on Friday, January 17, 2020, that the country’s total public debt has risen from its N26.22 trillion figure recorded in September 2019.
Patience Oniha, The Director-General of DMO disclosed this information at a media briefing in Abuja. The interactive session sought to review DMO’s activities and its plans for raising capital from both domestic and external sources in the year 2020.
Oniha explained that the comparative debt figure for June 2019 was N25.701 trillion, which implied that in the quarter of July to September 2019, the total public debt grew by 2.0 percent. She added that the debt stock comprised of that from the federal government, 36 state governments and also from the Federal Capital Territory. The total debts also include promissory notes valued at about N821.7 billion.
An increase in new borrowings from the Appropriation Acts between 2015 and 2017 together with Nigeria’s low revenue base, contributed greatly to its current debt crisis portfolio. The low revenue base of Nigeria relative to its GDP is reflected in the high Debt Service to Revenue Ratio. This brings to fore, the need for revenue to grow. Director-General of DMO made it clear that with efforts to realize increased and diversified revenue base, especially through the VAT increase in the new Finance Bill, there will be a revenue growth in the West African country.
Moving forward, efforts towards increasing and diversifying revenue such as the passage of the Finance Act and Strategic Revenue Growth Initiative of the Federal Ministry of Finance, Budget and National Planning need to be supported.
Similarly, for external borrowings, the DG disclosed intentions to speak with concessionary lenders concerning the 850 billion Naira ($2.8 billion) external borrowings earmarked in Nigeria’s 2020 budget. “Any shortfall thereafter may be raised from commercial sources,” she said. At the rising cost of debt service, Oniha affirmed that the strategy to seek concessionary loans and semi concessionary loans due to its lower interest rate and longer maturities will help relieve the country of its high debt figure.
Also, N744.99 billion allocated for the new domestic borrowings will be raised through the Federal Government of Nigeria (FGN) Bonds, N150 billion SUKUK, FGN savings bonds, and Green Bond. The SUKUK will be dedicated specifically for financing road construction projects in various locations across the country.
With the Nigerian government moving to become debt-free through initiating new policies and seeking external concessionary loans, the total public debt rate is set to reduce at an astounding figure over time.
