Nigeria’s debt climbs to N48.9 trillion

Nigeria’s total debt has risen to N48.93 trillion, with government borrowing about N3.73 trillion in the past five months.

The Nation reports that the government raised about N1.599 trillion in the fourth quarter of 2022.

The Debt Management Office (DMO), which oversees the issuance and management of Nigeria’s sovereign debts, had earlier confirmed that the government had raised N2.129 trillion in the first two months of 2023.

The breakdown shows that Nigeria’s domestic debts have risen to about N30.643 trillion, primarily due to new borrowings of about N1.599 trillion in the fourth quarter of 2022 and N2.129 trillion between January and February 2023.
Nigeria’s external debt increased to N18.282 trillion, mainly due to the depreciation of the naira against the dollar.
The national debt portfolio for the third quarter ended September 30, 2022, published by DMO indicated that Nigeria had total debt of N44.064 trillion, including domestic borrowing of about N26.916 trillion and converted external debts of N17.148 trillion.

The DMO had applied the then-official exchange rate of N432.37 per dollar to the country’s external debt of $39.662 billion.
The Central Bank of Nigeria (CBN) yesterday indicated the official exchange rate at N460.96 per dollar, implying the addition of some N1.13 trillion to the country’s converted foreign debts due to currency depreciation. With this, external debts increased from N17.148 trillion in the third quarter of 2022 to stand now at N18.282 trillion.

With maturing debt obligations and running a budget deficit, the government has continued to raise funds through the monthly issuance of regular bonds, retail savings bonds and treasury bills.

READ ALSO:

• INEC seeks to reconfigure BVAS for gov poll, approaches court
• Naira Redesign: Confusion as CBN keeps mum 72 hours after S’Court’s ruling
• Domestic worker, others cut off genitals of 72-year-old employer’s body parts for money ritual

A breakdown of the debt issuances showed that about N852.926 billion were raised through the Nigerian Treasury Bills (NTBs), N4.174 billion through the Federal Government of Nigerian Savings Bonds (FGNSBs) and N741.55 billion through regular bond and Sukuk issuances in fourth quarter 2022.

In January 2023, the government raised N662.617 billion through its regular bond auction, N277.468 billion through the NTBs and N533.03 million through the FGNSBs, a retail monthly debt issuance introduced in 2017.

It raised N1.189 trillion in February 2023, including N770.56 billion through bond auctions, N417.064 billion through NTBs and N1.271 billion through the FGNSBs. Total borrowings in February 2023 represented a 26.4 per cent increase above N940.62 billion raised in January 2023.

The total debt issuance in the past two months represented more than a 33 per cent increase on the total debt issuance in the fourth quarter of 2022.

Faced with sovereign downgrades by global rating agencies, with attendant higher risk profile and cost for international debt issuances, the government appeared to be increasingly dependent on the domestic capital market to raise N8.8 trillion regular debt component of the 2023’s N10.78 trillion deficit.

Providing clarification on the recent borrowings, the DMO stated that the domestic debt issuance was designed not only to provide funds to finance the budget deficit but also to refinance the Federal Government’s maturing obligations during the fiscal year.

According to DMO, out of the N2.129 trillion raised so far this year, only N1 trillion has been deployed for deficit financing, 14.2 per cent of total estimated domestic borrowings of N7.043 trillion in the 2023 budget. The agency said the balance of the funds raised was for refinancing maturing obligations.

The Federal Government laid out a budget size of N20.51 trillion on a total revenue of N9.73 trillion in 2023, with plans to borrow N10.78 trillion in 2023.

Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, at the public presentation of the breakdown and highlights of the 2023 budget proposal, said the overall budget deficit of N10.78 trillion for 2023 would largely be financed through domestic loans.

She outlined that the budget deficit would be financed mainly by borrowings including domestic sources, N7.04 trillion; foreign sources, N1.76 trillion; multilateral and bi-lateral loan drawdowns, N1.77 billion and expected N206.18 billion proceeds from the privatisation of national assets.

Nigeria’s public debt has continued to generate intensive debate on the growing size of indebtedness and the burden of sustainability amidst declining national revenue.