By Modupe Gbadeyanka
The Debt Management Office (DMO) said the total debt profile of Nigeria rose to N24.4 trillion in December 2018 from N21.7 trillion in 2017, indicating a 12.25 percent rise in 12 months.
Director General of DMO, Ms Patience Oniha, while addressing the media on Thursday in Abuja disclosed that the funds were borrowed to fund projects, to finance budget deficit and to refinance maturing obligations, adding that some foreign debts were used to refinance treasury bills because of the short tenor of the bills.
The debt office chief noted that borrowing from abroad had also helped to stabilise the local currency in the last two years.
According to her, federal government’s domestic debt stock included N331.12 billion Promissory Notes issued to oil marketing companies and state governments in December 2018.
On the nation’s Debt Management Strategy, Ms Oniha said some targets that had been set had been achieved or nearly achieved, including the plan to achieve a tenor of 75:25 ratio in favour of long tenor debts.
She said further that the target had been surpassed as the country now had a 78:22 ratio in favour of long term debts.
“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,” she said.
According to the DMO, the strategy of using relatively cheaper and longer tenured external funds is achieving the expected objectives.
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.
“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,” Ms Oniha said.
The DMO boss noted that borrowing for 2019 would be 50-50 split between domestic and external in striving to be consistent with the Debt Management Strategy 2013-2019 aimed at achieving a 60:40 ratio between domestic debt and external debt.
“Relatively low-interest rates mean the government can issue longer-dated bonds to continue to fund infrastructure projects.
“Revenue generating initiatives are expected to improve revenues and reduce the debt service to revenue ratio,” she said.
