Nigeria’s total debt stock recorded about 2.7 per cent increase to N10.43 trillion ($66.99 billion), against N10.16 trillion ($65.25 billion) at the end of the first quarter ended March 31, 2014.
The Debt Management Office (DMO) in its latest report of the nation’s debt statistics showed that the rise was the result of continued debt deals by the Federal Government internally and externally.
Specifically, the domestic debt figure moved to N7.42 trillion at the end of June, from N7.18 trillion at the end of March 2014, representing 3.3 per cent increase. This is beside the N1.6 trillion owed by states.
The external debt record also changed as the government brokered further deals amounting to about $200 million to reach $9.38 billion at the end of June, from $9.17 billion as at March 31, 2014.
However, there were no increments in the debt record of sub-national governments, as their total risk obligations remained stable at N1.6 trillion ($9.96 billion) at the end of June.
The states of the federation, also known as sub-national governments, have contributed to the rising notoriety of the country’s risk appetite.
The states’ rising debt accumulation started from the $1.7 billion outstanding as at December 2008, but by June 2012, records showed a total debt stock of $2.2 billion, an increase of $500 million.
However, from December 2012, the debt reached $2.64 billion as at June 2013, but assumed a proportional dimension as almost all the states got involved in raising capital for acclaimed development projects in their respective areas.
This resulted to phenomenal increase from $2.64 billion by June 2013, to $9.96 billion (N1.55 trillion) total debt stock, representing about $7.3 billion increase (more than 277 per cent) in just nine months.
The latest increase in the local debt profile could be attributable to the recent bond issuances by DMO, amounting to over N200 billion.
In the last five months, DMO’s domestic bond issuance has recorded about N385 billion, even as plans to raise more are in advance stages.
The economy managers had hinted that the domestic-external debt ratio, which is lopsided in favour of the costly domestic capital, would be bridged to a ratio of 60/40 in 2014 by further external debts.
The incentive to borrow more may not have been unconnected with the recent rebasing exercise of the Gross Domestic Product (GDP), which put the country’s debt to GDP ratio in lower single digit.
But according to the issuance notice of the debt office, new bonds worth about N100 billion were re-opened yesterday.
Specifically, N15 billion FGN Bond August 2016; N50 billion FGN Bond March 2024; and N35 billion FGN Bond July 2034 were re-opened yesterday at the rates of 13.5 per cent; 14.2 per cent; and 12.15 per cent respectively.
The rising debts have as well increased government’s obligations as it is faced with the hemorrhaging debt service to the tune of N712 billion this year, an attestation to fact that the nation is back into the debt game.
The debt service provision also represented a clear departure from N591.8 billion budgeted in 2013.
Nigeria’s external debt profile has been on the rise after it got to the initial peak in December 2004, when it hit a record high of over $36 billion, with about $28 billion or 85 per cent owed to the Paris club of 15 creditor nations.
As at September 2010, five years after the debt cancellation, Nigeria’s external debt had risen to $4.53 billion, while the domestic portfolio jumped to N4.6 trillion, from N3.22 trillion as at December 2009, representing about 41 per cent increase.
The increments continued in 2013, as it hit $8.3 billion in September, from $6.7 billion in March the same year, contributing about 13.59 per cent to the total debt as at second quarter of 2013.
Meanwhile, domestic debt as at 2012, amounted to N6.54 trillion and moved to N7.03 trillion as at September 2013, representing 84.5 per cent of the total debt stock and increased to N7.18 trillion six months later (March 2014).
The trend of the government’s domestic debt when measured by year-on-year average from 2009 to 2013, showed about 22.1 per cent yearly growth. – Guardian.
