Business

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

Published

2 years ago

September 21, 2022

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

Railway

Lagos Rail Mass Transit part of FG free train ride – NRC

Published

9 hours ago

December 21, 2024

Trends Admin

Lagos Rail Mass Transit part of FG free train ride – NRC

The Nigerian Railway Corporation (NRC) has disclosed that the Lagos Rail Mass Transit (LRMT) trains are included in the Federal Government’s free train ride initiative for the Christmas and New Year celebrations.

The LRMT, which currently includes the Phase 1 Blue Line Rail and the Phase 1 of the Red Line Rail, operates under the Lagos Metropolitan Area Transport Authority (LAMATA).

This announcement was made by Ben Iloanusi, the Acting Managing Director of the NRC, during an interview on NTA News TV on Friday, following the launch of the initiative earlier that day.

While Iloanusi stated that Phase 1 of both the Blue Line and Red Line Rail projects are part of the program, LAMATA has yet to confirm this inclusion.

Lagos Rail Mass Transit part of FG free train ride – NRC

Business

NNPC denies claim of Port Harcourt refinery shutdown

Published

10 hours ago

December 21, 2024

Trends Admin

Port Harcourt refinery

NNPC denies claim of Port Harcourt refinery shutdown

The Nigerian National Petroleum Company Limited (NNPCL) has denied claims in media reports that the newly refurbished Port Harcourt refinery has shut down.

The national oil company denied the claim in a press release issued by its Chief Corporate Communications Officer, Olufemi Soneye, on Saturday.

Soneye said the claim was false and urged Nigerians to disregard it. He stressed that the Port-Harcourt Refinery is fully operational.

NNPC denies claim of Port Harcourt refinery shutdown

Business

CBN permits BDCs to buy up to $25,000 FX weekly from NFEM

Published

2 days ago

December 20, 2024

Trends Admin

CBN Governor, Olayemi Cardoso

CBN permits BDCs to buy up to $25,000 FX weekly from NFEM

The Central Bank of Nigeria (CBN) has granted Bureau de Change (BDC) operators temporary permission to purchase up to $25,000 weekly in foreign exchange (FX) from the Nigerian Foreign Exchange Market (NFEM).

This move, detailed in a circular dated December 19, 2024, is designed to meet seasonal retail demand for FX during the holiday period.

The circular was signed by T.G. Allu, on behalf of the Acting Director of the Trade and Exchange Department.

The arrangement will be in effect from December 19, 2024, to January 30, 2025.

Under the directive, BDCs may purchase FX from a single Authorized Dealer of their choice, provided they fully fund their accounts before accessing the market.