FG to fund N794 billion of its 2012 budget deficit through domestic debt

The Director-General of Debt Management Office (DMO), Dr. Abraham Nwankwo has said that the Federal Government will fund N794 billion of its 2012 budget through domestic debt, even as Nigeria’s total debt stands at about US $40 billion.

He disclosed this at a media parley with newsmen in Lagos, weekend, saying, Nigeria was not doing badly when its debt is compared with the Gross Domestic Product (GDP).

According to him: “The ratio of Nigeria’s debt to GDP is 19.6 per cent, which is lower than the 40 per cent global benchmark. Nigeria has set a limit of 25 per cent for itself, meaning she will not exceed such limit by 2015. So with this record, it means we are doing well, our economy is growing”

While giving a breakdown of Nigeria’s debt as at September 30, 2011, the DMO boss said: “Federal Government bonds stood at N3.356 trillion; Nigeria Treasury bills stood at N1.607 trillion, Treasury bonds stood at N353.730 billion.

Therefore, the total domestic debt totaled N5.317 trillion ( US$34.4billion). The External debt is as follows: Multilateral (World Bank group) $4.545.18 billion; Non Paris $588.53million; Euro bond $500million. Therefore, the total external debt is totaled $US 5.633.71billion.”

Nwankwo, however, explained that the a key outcome of Nigeria’s exit from Paris and London clubs categories of debts was the determined effort by the DMO to reassess the situation regarding the capacity of states to manage sub national debt.

In his words, “This was borne out of the increasing importance given to the relationship between different levels of government for achieving overall fiscal prudence especially in the federal system as practised in our country.

A study of sub-national debt management in Nigeria was undertaken and the results revealed the following: Absence of appropriate institutional framework for the coordination of debt management activities at the sub-national level; Weak public finance management institutions and practices at the state and local government levels;  Lack of Coordination of fiscal policies and operations of all tiers of government, amongst others.”

Vanguard