The debt owed by the Federal Government of Nigeria state governments and the Federal Capital Territory Administration has topped N2.75tn between July 1, 2017 and June 30, 2018, says the Debt Management Office

According to DMO, the country’s debt stood at N22.38tn as of June 30. This is an increase of N2.75tn (14 per cent) over a total debt of N19.63tn as of June 30, 2017.

The DMO attributed the rise in the debt profile over the one-year period to the $2.5bn Eurobond issued by the Federal Government in February.

The Director General of the DMO, Patience Oniha, also said at a briefing in Abuja on Tuesday that the DMO had been able to raise a total of N410bn from the domestic debt market for financing capital projects in the 2018 budget.

She said the money was part of the N793bn that would be borrowed from the domestic market within the year.

Answering questions from journalists, Oniha dismissed the notion that there had been excessive borrowing since the present administration came into power in 2015, arguing that the government only borrowed after thorough examination and questioning by lawmakers.

The DMO boss said, “If government didn’t borrow so much in the last three years, it wouldn’t have been able to function as a government.

“The huge borrowing became necessary following the fall in revenue from the fall in the price of crude and the attendant devaluation of the naira from the use of the external reserve to defend the national currency.”

Before the government came into power on May 29, 2015, the country’s debt status stood at N12.12tn.

In a statement issued at the Tuesday briefing in Abuja, the DMO said, “The total public debt, which encompasses the domestic and external debt stock of the federal and 36 state governments and the Federal Capital Territory, stood at N22.38tn or $73.21bn as of June 30, 2018.

“This figure was a marginal increase of 3.01 per cent over the public debt stock for December 2017. The increase in the public debt stock over the six months period was due largely to the $2.5bn Eurobond issued in February 2018.

“When compared to the debt data for March 2018, the public debt stock actually decreased by 1.44 per cent from N22.71tn in March 2018 to N22.38tn in June 2018.

“The decrease was due to a 3.38 per cent decline in the FGN’s domestic debt stock between March and June 2018. There were, however, marginal increases of 0.07 per cent in the external debt stock and 2.75 per cent in the domestic debt of states.”

According to the DMO, a major highlight in the public debt data was the consistent decrease in the FGN’s domestic debt, which declined from N12.59tn in December 2017 to N12.58tn in March 2017 and N12.15tn in June 2018.

The DMO said the reduction in the FGN’s domestic debt stock arose from the redemption of N198bn Nigerian Treasury Bills in December 2017 and another N639bn between January and June 2018.

A total of $3bn 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, the DMO said.

It explained that the implementation of the Public Debt Management Strategy, whose overall objective was to ensure that Nigeria’s debt was sustainable, was 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,” the DMO said.

According to the DMO, the released figures for June 30, 2018 showed that 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.

The DMO reported that its activities had resulted in lower interest rates for the benchmark FGN securities from about 18.5 per cent in January 2017 to 11 to 14 per cent in the first half of 2018.

It added that with the redemption of about N840bn of Nigerian Treasury Bills, more funds were available for lending by banks to the private sector.

External capital-raising activities also contributed to increase in external reserves, it stated.