With President Muhammadu Buhari’s fresh request to borrow additional $4.054bn and €710m external loans, Debt Management Office (DMO) disclosed on Wednesday that Federal, state governments and Federal Capital Territory (FCT) owed a total of N35.465 trillion as of the end of June 2021.

This is aside from the at least N10 trillion overdraft taken from the Central Bank of Nigeria (CBN) that is already long overdue for settlement.
The figure is an increase of N2.358 trillion in the debt stock from the end of the first quarter of the year to the end of the second quarter. The total debt figure stood at N33.107 trillion or USD87.239 billion as of March 31, 2021.

The debt stock is made up of N13. 711 trillion, representing 38. 66 per cent external debt while domestic debts amounted to N21 .754 trillion or 61. 34 per cent of the total.

President Muhammadu Buhari’s

The federal government accounted for N11. 828 trillion of the external debt and N17. 632 trillion of the domestic debt.

States and FCT external debt stood at N1.883 trillion, with a domestic debt stock of N4. 122 trillion.

The breakdown of the external debt showed that the bulk of the debt was owed multilateral (World Bank Group and the African Development Bank Group) which accounted for 54.88 per cent.

The next highest category was the Commercial debt (Eurobonds and Diaspora bond) which accounted for 31.88 per cent; while bilateral (China, France, Japan, India and Germany ) stood at 12.70 percent and Promissory Notes 0. 54 percent.

Director-General of DMO, Ms Patience Oniha who made the disclosure in a presentation said work has already started on adding the federal government debt to the Central Bank of Nigeria which was at about N10 trillion at the beginning of the process.

“We are working towards recognizing it, getting the proper approvals to include it in the public debt stock. Where we are is to get the necessary approvals to convert it into a tenured debt.”

She explained that the national debts had several benefits from going to source funds which included Showcasing Nigeria in a positive light in the international financial markets where large pools of capital are available.

“The sovereign Eurobonds serve as a benchmark on the back of which several local banks have issued Eurobonds. Amongst them are Zenith Bank, Access Bank, UBA, FBN, Ecobank Nigeria and Fidelity Bank. This window opened by the sovereign enabled these Nigerian Banks to raise Tier 2 Capital to meet regulatory requirements and enhanced their capacity to lend to, and, support local borrowers.

“Issuing Eurobonds has been a potent tool for building up Nigeria’s External Reserves. A healthy level of External Reserves supports the Naira Exchange Rate and Nigeria’s sovereign rating.

“Raising funds externally through Eurobonds to finance Budget Deficits reduces the level of sovereign borrowing in the domestic markets. The benefits of this are many: mitigates the risk of crowding out the private sector (more funds available at moderate rates for other borrowers in the domestic economy).

“The Eurobonds are also listed in Nigeria’s two (2) securities exchanges: The Nigerian Exchange Limited and FMDQ Securities Exchange Limited. This increases the size of these exchanges and the diversity of instruments listed.

“The Eurobonds are actually issued as part of approved Government Borrowing Plan usually in the FGN’s Annual Budgets, for financing capital projects thereby reducing the infrastructure gap.”

She advised members of the public to remember that “huge infrastructure deficit, recession (twice in the last six years), consecutive budget deficits, low revenue base, compounded by dependence on one source – crude oil which prices crashed and at a point, at the peak of the COVID-19 pandemic had no buyers were the reasons necessitating the loans.

According to her, the five per cent tax as a percentage of the Gross Domestic Product (GDP) was too poor for Nigeria and that concerted efforts must be made to increase the nation’s revenue.

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