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Nigeria’s total debt rises to N12.1tn – DMO

By on July 2, 2015

The nation’s total debt rose to N12.1tn ($60.8bn) as of March 2015, up from N11.2tn at the end of December 2014, data obtained from the Debt Management Office’s website showed on Tuesday.

The statistics also showed that foreign debt stood at $9.46bn at the end of March, down from $9.71bn at the end of 2014.

This means that the current foreign debt is about 15 per cent of the total debt.

The Federal Government had in 2013 said it would increase the amount it borrowed overseas to 40 per cent of the total debt over a three-to-five year in order to tap into loose monetary policy in advanced economies.

However, dwindling oil prices has left the sharp drop in revenue, leaving the government struggling to pay bills including state salaries. The naira has also come under intense pressure.

States are now in debt to the tune of N658bn, the governor of Zamfara state said last week.

Investors are worried domestic debt has risen sharply since the end of March, and concerns about government finances, as well as the slide in the naira, are hitting markets.

The yield on the five-year bond, the most liquid issue, rose to 14.95 per cent on Tuesday, up from 14.71 per cent a week ago, Reuters reported on Tuesday.

The former Minister of Finance, Dr. Ngozi Okonjo-Iweala, had said in early May that the government had already used half the borrowing allowance it had budgeted for as lower oil prices reduced revenues.

Abuja’s funding problems and the naira’s weakness on the black market are fuelling market concerns that more domestic bonds may have to be sold, raising the cost of borrowing.

The rebasing of the economy last April made Nigeria’s Gross Domestic Product to almost double to more than $500bn, Africa’s biggest.

However tax collection as a percentage of revenue is a paltry six per cent

Economic analyst, Mr. Ayodeji Ebo, said the huge deficit in the 2015 budget had shown that the federal government would increase its borrowing this year.

“The main concern is that the borrowings have been used to finance recurrent expenditure instead of recurrent expenditure,” he added.

 

[Punch]