By Kayode Tokede
The Central Bank of Nigeria (CBN) has disclosed that debt services hit N224.9 billion ($1= N306.85) or $732.94 million in seven months of 2019.
The international payment by CBN disclosed that N30.08 billion or $65.44million was used on debt services and payment; N59.36 billion or $193.43million for February; N29.38billion or $95.75million for March and N13.5 billion or $44.06 million for April.
For May, the CBN’s international payment revealed that N58.2 billion or $189.7 million was used to service debt but it dropped to N5.7 billion or $18.57 million in June.
In addition, N38.7 billion or $126 million was used to service debt in July, the international payment data by CBN disclosed.
According to the apex bank international payment, the debt services and payments for seven months of 2018 was N301.8 billion or $983.5 million, data obtained by Nigerian NewsDirect has revealed.
The CBN in 2018 reported an accumulative sum of N451.7 billion or $1.47 billion to service debt.
The country’s debt-to-GDP (Gross Domestic Product) ratio remains arguably sustainable as the public debt levels continue to rise.
According to the Debt Management Office (DMO), the stock of total public debt rose from $79.4 billion at end of December 2018 to $81.2 billion at end of March 2019.
The debt office had explained that the external debt component had moved from $18.9 billion in December 2017 to $25.2 billion in December 2018 and further to $25.6 billion by March 2019.
A member of the CBN’s Monetary Policy Committee (MPC), Dr. Robert Asogwa, had said the increasing appetite for internationally private held debt and a persistent hunt for Eurobonds is worrying.
In his statement at the last MPC meeting in July, he said, “Besides the associated high cost of borrowing, the huge debt levels crowd out other development spending given the portions of government revenue allocated annually to service the debt.
“A coordinated domestic revenue expansion with simultaneous fiscal prudence will be key to addressing the current weak fiscal position of the economy.”
Another member of the MPC, Idiah Obadan said the nation’s total public debt outstanding stood at N24.947.08 billion as at end March, 2019.
According to him, the federal government debt poses a serious burden with nearly 30 percent of the budget devoted to debt servicing.
“Although the debt-GDP ratio is relatively low, the debt – revenue ratio is very high. And it must be stressed that GDP is not used to service debt; rather is revenue in the case of domestic debt or export earnings in the case of external debt.
“Therefore, caution must be exercised on further borrowing while domestic revenue mobilisation efforts are stepped up.”
The Deputy Governor, Economic Policy Directorate, CBN, Dr Okwu Nnanna, said the fiscal conditions remained disappointing and could further exacerbate the public sector debt and debt service challenges.
He said strengthening the institutional capacity to grow buffers, particularly efficiency in revenue collections, would yield significant economic benefits