Nigeria's public debt increased by 2.5 trillion naira to 38 trillion naira(Read Details)

Nigeria's total public debt increased by N2.54 trillion from the end of the second quarter of 2021 to N38.005 trillion ($92.626 billion) at the end of the third quarter.

According to statistics issued by the Debt Management Office (DMO), the debt consisted of the federal government's total external and domestic obligations, as well as the debts of 36 state governments and the Federal Capital Territory (FCT).

The DMO said that the N2.540 trillion rise over the similar amount of N35.465 trillion at the end of Q2 2021 was mostly accounted for by the federal government's $4 billion Eurobonds issued in September.

According to the debt management agency, the issuance of the $4 billion Eurobonds provided significant benefits to the economy by increasing Nigeria's external reserves, thereby supporting the naira's exchange rate, and providing necessary capital to enable the federal government to finance various budget projects.

The triple-tranche $4 billion Eurobond issued in September was for the execution of the $6.18 billion New External Borrowing in the Appropriation Act for 2021.

Meanwhile, Patience Oniha, the Director General of the DMO, stated yesterday that the federal government plans to minimize local borrowing next year in anticipation of higher domestic income. Oniha further revealed that the federal government borrowed a total of N5.134 trillion from the local debt market in 2021, with N4.6 trillion slated for borrowing in 2022.

She made the claims while presenting at a webinar hosted by Coronation Merchant Bank in collaboration with the DMO on "Nigeria Moving Beyond COVID-19: Opportunities for Investors."

While the country's treasury bill liabilities appeared to be increasing recently, Oniha claimed the debt office had been able to lower its portion of the local debt portfolio to less than 25%. She stated that the current percentage of treasury notes in the local debt basket is roughly 21%.

She claims that:

“We have done better than keeping TBills at 25 per cent. We actually came down to 21 per cent from that in terms of total domestic debt because we wanted to reduce the re-financing risk.

“Even with the increase we are still below 25 per cent maximum in terms of total domestic debt. The target is not to go up. We just kept it there because there are other transactions, such as promissory notes that we are issuing that will increase the short-term component.

“What is driving the additional issuance of TBills is because the new borrowing levels are extremely high. Last year, it was N4.6 trillion, while the initial budget was about N1.7 trillion. All of that couldn’t have come from bonds only at decent rate, so some of it is being taken from TBills usually at the long end.

“If you see the auction results you see that we are more at the 360-day tenure. It is true we are issuing more TBills, but more like new borrowings to fund the budget. Again this year’s new borrowing is about N5.134 trillion, next year we are still in the range of N4.6 trillion.”

Oniha stated the following on the expected borrowings for next year:

"The presumption is that even if we make 100% of that income in the budget and then incur all of our expenditures, we will still have to borrow."

“Unless we double or triple those revenue in the budget that is the only condition in which we won’t borrow. If revenue performs 100 per cent we are still going to borrow, anyway, based on the medium term expenditure framework.

“We keep telling the public and those tracking the debt profile of the country that actually the source of the borrowing is coming from the budget and in a few cases the separate projects that were approved and those are usually external.”