Nigeria's debt declines by 1.44%, sustainable — DMO


The director-general, Debt Management Office (DMO), Ms. Patience Oniha has said, the nation’s debt stood at N22.38 trillion at the end of June 2018, up three per cent from N21.68 trillion at end of December 2017.
The DMO boss at a brief briefing in Abuja on Tuesday said debt rose after the office issued a $2.5 billion Eurobond in February.
According to the DMO, the debt data for March 2018, showed that the Public Debt Stock actually decreased by 1.44per cent from N22.707 trillion in March 2018 to N22.38 trillion in June 2018.
“The decrease was due to a 3.38per cent decline in the FGN’s
“Domestic Debt Stock between March and June 2018. There were however marginal increases of 0.07% in the External Debt Stock and 2.75per cent in the Domestic Debt of States.
“A major highlight in the Public Debt Data was the consistent decrease in the FGN’s Domestic Debt which declined from N12.589 trillion in December 2017 to N12.577 trillion in March 2017 and N12.151 trillion in June 2018.
According to the DMO boss, “this reduction in the FGN’s Domestic Debt Stock arose from the redemption of N198 billion Nigerian Treasury Bills in December 2017 and another N639 billion between January and June 2018.”
It will be recalled that a total of $3 Billion was raised through Eurobonds to refinance maturing domestic debt as part of the implementation of the debt management strategy for the purpose of substituting high cost Domestic Debt with lower cost External debt to reduce Debt Service Costs for the Government. It should be noted that the implementation of the Public Debt Management Strategy whose overall objective is to ensure that Nigeria’s debt is sustainable, is already yielding positive results.
One of the beneficial outcomes is the rebalancing of the Debt Stock; the Ratio of Domestic Debt to External Debt inching towards the target of 60:40 and the target of 75:25 between Long Term Domestic Debt and Short Term Domestic Debt.
According to the figures for June 30, 2018 released by the DMO, the Ratio between Domestic and External Debt stood at 70:30 compared to 73:27 in December 2017. Similarly, the Ratio between Long Term Domestic Debt to Short Term Domestic Debt was 76:24 in June 2018 compared to 72:28 in December 2017.
Thus, the DMO’s activities have resulted in lower interest rates for the Benchmark FGN Securities from about 18.5per cent in January 2017 to 11-14per cent in the first half of 2018.
Also, with the redemption of about N840 Billion of Nigerian Treasury Bills more funds were available for lending by banks to the Private Sector. External capital raising activities also contributed to the increase in External Reserves.