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Nigeria’s debts ‘ll rise to N8.8trn by 2015 – DMO

By on June 5, 2013

The Debt Management Office, DMO, Tuesday, said Nigeria’s outstanding debt will rise to N8.809 trillion ($55.4 billion) by 2015.

According to a report by the DMO, this was contained in the country’s debt strategy for the next three years.

The DMO said the adoption of the debt plan would sustain development of the domestic debt market and provide external funding at preferred cost for capital projects.

The DMO had told the National Assembly that it plans to borrow N3.975 trillion ($25 billion) by 2015.

Dr. Abraham Nwankwo, Director-General, DMO, disclosed this in his presentation on Nigeria’s overall debt profile and expected borrowing for 2013-2015 at a meeting with the House Joint Committee on Finance, Legislative Budget and Research, National Planning and Aid, Loans and Debt Management.

The committee is also scrutinising the 2013-2015 Medium Term Expenditure Framework and Fiscal Strategy, MTEFF, paper submitted by President Goodluck Jonathan.

He said the projected figure represents Nigeria’s foreign and domestic borrowings flowing from 2013-2015 under review.

He projected Nigeria’s external debt for 2013 at $12.165.10 billion), rising to $14.585 billion in 2014 and $16,765 billion in 2015.

He gave the breakdown of Nigeria’s domestic debt to be $7.125 billion for 2013; $7.792 billion for 2014 and $8.4441 billion for 2015.

Also, the DMO had a couple of days ago said Nigeria’s total debt to Gross Domestic Products, GDP, ratio now stands at 20.77 per cent against the 21.50 per cent in December 2011.

Nwankwo said the debt to GDP ratio should not exceed the 20-25 per cent threshold, adding that government was committed to ensuring that it did not rise beyond 30 per cent. He said the threshold set for countries in the rank of Nigeria was 40 per cent.

Nwankwo said in spite of the 40 per cent threshold, the nation had decided to remain conservative by ensuring that it would not exceed 25 per cent by 2015.

He, however, said there was the possibility that the country’s debt to GDP could reach 30 per cent in the future, adding that borrowing was part of modern economy.

He said the nation’s domestic and external debt stood at N6.49 trillion and $6.67 billion, respectively as at March.

Nwankwo said government had not relented in its effort to introduce the inflation-linked bond whose coupon rate would increase as inflation increased. He said part of the N577 trillion to be raised by government from the domestic bond market to finance the nation’s deficit for the year would be inflation-linked bond.

He also said that plans to go to international capital market to raise one billion dollar euro bond was still on course, adding that the fund would be used specifically to transform the power sector.