By Modupe Gbadeyanka
A report has disclosed that the external debt service of Nigeria in the first quarter of 2017 stood at $130 million.
Analysts at FBNQuest Research said on Monday that if the interest and fee payments of $90 million were taken off, it would amount to an annualised average interest rate of 2.6 percent.
The report said the optimal blend of federal government’s domestic/external debt obligations, according to the DMO’s medium-term strategy, was 60/40, while the ratio for the FGN at end-March remained unchanged at 76/24.
It said in stark contrast to the challenging burden of its sovereign domestic debt service, the data for Nigeria’s external obligations were comforting.
According to FBNQuest Research, total obligations at end-March amounted to $13.81 billion, equivalent to 3.4 percent of 2016 GDP.
The increase in Q1 amounted to $2.4 billion, consisting of Eurobond sales of $1.5 billion as well as higher borrowings of $260 million and $600 million from the World Bank and African Development Bank (AfDB) respectively.
The report said Q3 should bring another rise in market borrowings since the FGN is about to embark on a roadshow for its $300 million diaspora bond.
It noted this breakdown of additional external borrowings points to a rising burden of external debt service.
“Its cost, as we have often noted, is a fraction of that of servicing the FGN’s domestic debt. Looking ahead, the FGN has plans to increase its external borrowings, subject to the go-ahead from the National Assembly: further Eurobond sales, the long-running talks with the World Bank on budget deficit financing and loans from China (including those for public agencies such as the NNPC, guaranteed by the FGN),” FBNQuest said in the report titled ‘The better news on external debt.’
Adedapo Adesanya