Nigeria’s public debt rises by 17% last year, hits N46.25 trillion

Federal and state government debt stock climbed by 17 per cent or N6.69 trillion last year to reach N46.25 trillion, setting a new all-time high
Nigeria-debt.Pix: GOOGLE
Nigeria-debt.Pix: GOOGLE

•Up-to-date domestic borrowings of most states not captured in national data
•FG incurs N4.97 trillion as cost of debt service in 12 months
•Mature bonds, NTBs refinanced, says DMO

Federal and state government debt stock climbed by 17 per cent or N6.69 trillion last year to reach N46.25 trillion, setting a new all-time high.
The new figure is N2.19 trillion (or five per cent) higher than what was on record as at the end of September 2022 when the debt profile was N44.06 trillion.

The amount discounts the net debt accumulation of most of the states, whose records were last updated on June 30, September 30, 2022, or as far back as 2021.

According to an update by the Debt Management Office (DMO), records of Rivers State Government’s domestic borrowings had not been updated since September 30, 2021 while 16 others were last updated at the close of the first half of last year.

Also, information on domestic debts incurred by 31 states, the debt office said, in the last quarter of 2022, had not been captured.

The incomplete disclosure from states suggests that the actual amount could be higher than what is declared publicly.

DMO also revealed that the external debt component, which was estimated at N18.7 trillion or 40.4 per cent of the composite figure, was converted at N432.37/$, which is close to N30 markdown of the current N460 a dollar trades at the Investors’ and Exporters’ (I&E) window.
Also, the figure does not capture the Central Bank of Nigeria’s (CBN) accumulated budget support to the Federal Government through the ways and means (W&Ms) window that was last estimated at N22.7 trillion.

If the government draws the recent fresh request of N1 trillion that was approved by the lawmakers shortly before they proceeded on an election recess, the controversial CBN overdraft would be close to N24 trillion.

The executive had written to both chambers of the National Assembly to approve its plan to restructure the debt into a 40-year bond, a request that has been consistently turned down.

With the monetary policy rate (MPR) now 18 per cent, the government could spend as much as 4.8 trillion servicing the debt held by the state’s banker (CBN).

President Muhammadu Buhari had disclosed that FG agreed to pay MPR plus 300 basis points as interest on the amount and that the government would spend an additional N1.8 trillion as the cost of servicing it, this year, except the restructuring plan scaled the legislative hurdle.

As at the end of last year, the country’s debt to gross domestic (GDP) ratio was 23.2 per cent as against the government’s self-imposed 40 per cent threshold and World Bank’s recommended 55 per cent.

But with the country’s inability to convert its huge potential to public revenue, there are concerns about the rising debt service-to-revenue ratio, which exceeded 80 per cent for the first time last year.

Last quarter, the government incurred a total of N4.97 trillion as the cost of servicing both external and domestic debt, data obtained from the DMO showed.

The document also confirmed the government is currently struggling to meet its debt obligations. For instance, the DMO said bonds and Nigerian treasury bills (NTBs) that matured last quarter were refinanced as supposed to liquidating it.

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