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FG spends N471bn to service debts

By on January 5, 2015

The Federal Government spent a total of N471bn to service its domestic and external debts in the first half of the 2014 fiscal year, figures obtained from the Budget Office of the Federation have shown.

The figure, contained in the Budget Monitoring and Implementation report for the first and second quarters of 2014, was approved by the Minister of Finance, Dr. Ngozi Okonjo-Iweala.

In the two-part report, a copy of which was obtained by our correspondent on Friday in Abuja, showed that the sum of N299.36bn was utilised to service debts in the first quarter while the second quarter had N171.6bn, making a total of N471.3bn.

A further breakdown of the quarterly figure indicated that for the first quarter, the servicing of domestic debt obligation gulped a huge chunk of the N279.64bn while the balance of $119.48m (N20.07bn) was used to service external debt.

For the second quarter of 2014, the report said while the sum of N161.8bn was spent to maintain domestic debts, external debt servicing gulped $58.7m (N9.8bn).

It said, “As of 30th June, 2014, a total of N161.80bn was released for domestic debt servicing while the actual domestic debt payment was N224.51bn.

“The difference of N58.61bn (or 35.33 per cent) between the quarterly budgeted estimate of N165.9bn for domestic debt services and the actual domestic debt service was mainly due to additional issues of FGN Bonds above the amount projected to be issued, due to changes in the issuance calendar and the rising cost of rolling over Nigeria Treasury Bills.

“The actual external debt service payment in the second quarter of the year amounted to $58.7m. A breakdown of the payments indicated that $31.39m (or 53.48 per cent) was to multilateral creditors; $0.37m (or 0.63 per cent) was to non-Paris bilateral creditors, $6.08m (or 10.36 per cent) was to commercial (Euro-bond) creditor and $20.86m (or 35.54 per cent) was to others.”

Nigeria’s overall public debt stock, according to Okonjo-Iweala, stood at $69.6bn or about 13 per cent Gross Domestic Product made up of external debt of $9.5bn and domestic debt of $60.1bn.

As of September 2014, the total debt of the Federal Government and the 36 states of the federation as well as the Federal Capital Territory was N10.84tn, according to statistics from the DMO.

Details of the debt status of the country showed that the external debts of both the Federal and state governments then amounted to $9.52bn or N1.48tn.

As of September 30, the domestic debt stock of the Federal Government alone stood at $49.12bn or N7.65tn. The domestic debt of states, on the other hand, stood at $10.97bn or N1.71tn.

While financial analysts described the nation’s debt stock as worrisome, the finance minister blamed the increase in domestic debt on the 53.7 per cent rise in the 2010 wage bill.

She, however, noted that since then, the administration of President Goodluck Jonathan had been cautious about the issue of debt and borrowing.

She said, “We have focused on more long-term concessional debt financing to finance infrastructure such as power, rail, road and water.

“For the first time in our nation’s history, we even managed to retire N75bn of domestic bonds in 2013. Our efforts had helped to drive down domestic borrowing from N852bn in 2011 to N642bn in 2014.

“Despite the present tough situation, we do not plan to go on a borrowing spree but instead further take down domestic borrowing to N570bn in the 2015 budget.”

She said the government was conscious of the need to watch the debt service to revenue ratio, which climbed from 17 per cent in 2011 to 19 per cent in 2014 and projected at 22 per cent in the 2015 budget.

 

[Punch]