FG service domestic debt with N5.24tn in 30 months – Newstrends
Connect with us

Business

FG service domestic debt with N5.24tn in 30 months

Published

2 years ago

on

Nigeria’s domestic debt service rose to N5.24 trillion in 30 months, data on the Debt Management Office (DMO) website has revealed.

The domestic debt was put at N20.95 trillion as of June 2022.

The latest report by the DMO revealed that domestic debt service in the first quarter of 2022 was at N664.73 billion, representing 0.6 per cent decline from N668.69 billion in the second quarter of 2022.

This implies that the Federal Government has serviced domestic debt with N1.33 trillion in the first half of 2022, a 43 per cent Year-on-Year (YoY) increase from N935.46 billion reported in first half of 2021.

Further breakdown revealed that the government domestic debt service was at N2.05 trillion in 2021, a 10.8 per cent increase from N1.85 trillion in 2020.

Following massive budget deficit, the FG of recent has borrowed aggressively through treasury bills, bonds, savings bonds and Sukuk to support infrastructure development across the country.

Experts have raised concerns as the government continues to obtain new loans from both local and external sources, despite growing debt profile and servicing cost.

The International Monetary Fund (IMF) has predicted that Nigeria’s debt service-to-revenue ratio would jump to 92 per cent in 2022 from 76 per cent in 2021.

Speaking with THISDAY, the CEO, Wyoming Capital & Partners, Mr Tajudeen Olayinka stated that the debt servicing by the federal government over the years has encouraged investors to provide additional support to the government with respect to further investment in government securities.

According to him, “It presents government in good light, with the opportunity to fund developmental projects across the country.

“The negative aspect of debt servicing in Nigeria is the sustainability problem that has now greeted the current administration of President Muhammadu Buhari, whereby, more than 100per cent of revenue is now being expended on debt servicing, giving room for possible default and failure of government in no distant future, especially with respect to foreign debt component.

“The fact that government spends its entire revenue to service debts, despite introducing new taxes and raising rates in some others, is an indication that economic agents are not generating enough outputs, sufficient to put Nigeria’s economy in the positive territory. It is actually a sign of declining output. It is simply a failure of fiscal policy.”

He hinted that the only way to cut the debt service figure down is for government to shift away from its current public sector dominance, and allow private sector businesses to occupy the driver’s seat, so as to consistently put the economy in the positive territory.

“Government should begin to consider removing subsidies in phases, in a manner that will not add more to the hardship on the ground. It also presents an opportunity to allow the economy to run a normal course of adjustment,” he added.

The CEO, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf commenting on raising debt profile noted that, “When we take account of borrowings from the CBN and the stock of AMCON debt, the debt profile would be in excess of N60 trillion.

“Although government tends to argue that the conditions was not a debt problem, but a revenue challenge.  But debt becomes a problem if the revenue base is not strong enough to service the debt sustainably.  It invariably becomes a debt problem and possibly a debt crisis.  Government actual revenue can hardly cover the debt service obligations.

“Which implies that the entire capital budget and the recurrent expenditure may have to be funded from borrowing. This is surely not sustainable.  The finance minister reported recently that in the first four months of this year, debt service to revenue ratio was over 100per cent.”

According to him, “What is needed is the political will to cut expenditure and undertake reforms that could scale down the size of government, reduce governance cost and ease the fiscal burden on the government.

“It is imperative for the country to operate as a true federation which it claims to be.  The unitary character of the country is making it difficult to unlock the economic potentials of the sub nationals.  It is perpetuating the culture of dependence on the federal government.

It is necessary to scale down the size of government and cost of governance.  Fiscal sustainability is driven by both cost and revenue. Therefore, managing the major drivers of cost and revenue is imperative.

“As far as possible, the government should push back in sectors or activity areas where the private sector has the capacity to deliver desired outcomes.   We should see more privatization at all levels of government.

“This would allow for the infusion of more private capital into the infrastructure space. We need to address the fuel subsidy conundrum at some point as it clearly not sustainable.”

– Thisday

Related Topics:
Advertisement

Business

We’re not involved in N40m HxAfrica mortgage scheme – FMBN

Published

16 hours ago

on

November 17, 2024

By

We’re not involved in N40m HxAfrica mortgage scheme – FMBN

By Dada Jackson

 

The Federal Mortgage Bank of Nigeria (FMBN) has distance itself from claims linking it to a N40 million mortgage pre-financing scheme promoted by Housing Exchange Africa (HXAfrica).

In an official disclaimer issued by Virginia Jang, FMBN’s Group Head of Corporate Communications, it clarified that the bank has no formal partnership or approval arrangement with HXAfrica concerning the alleged scheme.

“The management of the Federal Mortgage Bank of Nigeria wishes to disclaim reports in the media by HXAfrica (Housing Exchange Africa) on a purported N40 million mortgage pre-financing scheme, which referred to FMBN as a partner,” Jang stated

She further explained that while HXAfrica had applied for engagement with the bank, no approvals had been granted, and no formal agreements had been finalized.

Jang emphasized that FMBN remains committed to advancing housing initiatives, including the forthcoming Diaspora Mortgage Scheme, which is being developed in collaboration with the National Diaspora Commission (NIDCOM)

“While the FMBN and NIDCOM remain committed to the roll-out of the Diaspora Mortgage Scheme after obtaining the necessary regulatory approvals, we will endeavour to provide official information and updates on our respective websites and social media handles to prevent the public from being misled,” she added.

The statement also revealed that NIDCOM had issued a similar disclaimer regarding the HXAfrica scheme, urging the public to be cautious of unverified claims.

FMBN assured citizens that details of the official Diaspora Mortgage Scheme would be communicated through authorized channels once regulatory approvals are secured.

The bank reiterated its commitment to delivering credible housing solutions while encouraging the public to rely only on updates from its verified platforms.

Continue Reading

Auto

Soludo: Kojo assembly plant will make Anambra auto manufacturing hub

Published

1 day ago

on

November 16, 2024

By

Soludo: Kojo assembly plant will make Anambra auto manufacturing hub

 

Anambra State Governor, Professor Charles Chukwuma Soludo, has expressed optimism that the new Kojo automotive assembly plant at Umunya along the Enugu-Onitsha Expressway will not only boost the economy of the state but also reposition it as an automotive manufacturing hub.

The assembly plant nearing completion is expected to roll out its first set of vehicles under the Soludo administration soon.

The governor spoke at the just concluded Anambra State Investment Summit (ANINVEST 2.0) with Kojo Motors as one of the official partners and sponsors.

This year’s ANINVEST held under the theme “Changing Gears: Accelerating Anambra’s Economic Transformation”

was organised by the state government as a pivotal event in advancing the collective vision for rapid development of the state’s economy.

Speaking on the sidelines of the summit, Managing Director of OMAA, Chinedu Oguegbu, reiterated the plan of the company to invite Governor Soludo to commission the plant and drive the first locally assembled vehicle out of the Kojo Assembly Plant by the first quarter of 2025.

He said, “His Excellency is very passionate about the Kojo Motors auto assembly plant. He is very eager to see its completion and commencement of assembly of vehicles come to reality.

“I can assure him and the state government that we are doing everything possible to ensure we meet with the governor’s wishes and aspirations.”

The event brought together stakeholders from the various sectors of the local and global economy including industry leaders, development partners, financial institutions and other relevant participants, all united in a commitment to accelerating the economic transformation of Anambra State.

Anambra, according to the state governor, is fast becoming a renewed investors’ destination for different types of money bags rushing to the state to capitalise on the pledged ease of doing business to set up businesses.

“This time around, one of such massive investments is being undertaken by John Ikenna Oguegbu, an indigene of the state and chairman, founder and CEO, Kojo Motors Limited,” Chinedu Oguegbu said.

Last year September, Governor Soludo performed the groundbreaking ceremony of the Kojo Motors auto assembly plant for the local assembly of the OMAA range of gas-powered mini passenger and commercial buses as well as Chinese range of Yutong passenger and commercial buses.

While congratulating John Ikenna Oguegbu, chairman and chief executive of Kojo Motors Limited for bringing his wealth to his home state to invest. Governor Soludo also commended the Yutong buses manufacturers from China for the smart move of coming to Anambra State to set up the auto assembly plant in collaboration with the local franchisee.

The governor stated that the decision to allow prospective investors to come and invest in the state was not out of philanthropy or charity, but rather a business decision model that would take Anambra State to the world and bring the outside world to the state.

Governor Soludo pledged the state government’s commitment and patronage of the vehicles rolling out of the Yutong Assembly plant.

He declared that the state government under his administration was on course for massive industrial development, employment generation and prosperity for all its citizens.

Continue Reading

Business

Naira slumps on NNPC, marketers importation of fuel

Published

2 days ago

on

November 16, 2024

By

Naira slumps on NNPC, marketers importation of fuel 

The naira has weakened further on the parallel market, dropping to N1,740/$ from N1,720/$.

Similarly, the NAFEM official exchange rate showed a slight depreciation on Friday, closing at N1,652/$ compared to the earlier rate of N1,650/$.

The Nigerian National Petroleum Company Limited (NNPC) and other oil marketers imported 1.5 million metric tonnes of petrol and 414,018.764 metric tonnes of diesel between October 1 and November 11, 2024.

The country’s inflation rate also spiked, with the Consumer Price Index (CPI) rising to 33.88% in October, up from 32.70% in September, according to the National Bureau of Statistics (NBS).

The oil importation statistics indicated  13,500 metric tonnes of jet fuel alongside petrol and diesel imports during the 42-day period.

The total value of these products was put at $1.9 billion or approximately N3 trillion.

The breakdown revealed that two billion litres of petrol, 500 million litres of diesel, and 17 million litres of jet fuel were imported.

But at an event in Lagos, NNPC’s Group Chief Executive Officer, Mele Kyari, highlighted the company’s commitment to reducing dependence on imported refined products.

The NNPC spokesperson Olufemi Soneye clarified that while the company prioritizes sourcing from local refineries, importation would continue based on economic factors.

READ ALSO:

“Today, NNPC does not import any products; we are taking only from domestic refineries,” Kyari stated. Soneye, however, added, “The GCEO’s statement should not be construed to imply that NNPC is obligated to be the sole off-taker of any refinery or that we will no longer import fuel. While NNPC prioritises sourcing products from domestic refineries, this is contingent upon economic viability.”

The Dangote Refinery, which has advocated for sourcing locally refined products, faces challenges with pricing dynamics, making the transition complex.

Aliko Dangote, the refinery’s President, recently disclosed that it holds over 500 million litres of fuel in reserves.

The NNPC’s importation data showed Lagos, Warri, Port Harcourt, and Calabar as key discharge points for refined products.

Naira slumps on NNPC, marketers importation of fuel 

Continue Reading

Trending