Despite public outcry over the country’s burgeoning debt and amidst fears that it is bringing Nigeria closer to a debt crisis, the Debt Management Office (DMO), on Friday said its public debt level rose by N3.78tr or 16.85% in the one year between the third quarter of 2018 and 2019.
At the end of September last year, according to Patience Oniha, the DMO’s Director-General, Nigeria’s total public debt stood at N26.21tr ($85.54bn), up from N22.43tr a year earlier.
Even at this, she said Nigeria has a debt-to-GDP ratio of 18.47%, which is lower than its limit of 25%, besides comparing favourably with those of developed countries, some of which are above 100%. The country, however, spends over half of its revenues in debt service.
Not done yet, and in the midst of decline public revenue as a result of which the Federal Government announced far-reaching plans to raise its earning profile, Oniha said the country is in talks with concessionary lenders for about N850bn ($2.8bn) in external borrowings as earmarked in its 2020 budget.
This N850bn, she told newsmen in Abuja, “does not mean Eurobonds. We will still talk with concessionary lenders.”
For new local financing, the debt office said the government would issue N150bn worth of Sukuk this year, in addition to bonds and treasury bills.
Oniha said the strategy is to seek concessionary loans first due to the lower interest rate and longer maturities, and any shortfall might be raised from commercial sources.
Nigeria plans to spend N10.59tr ($34.6 billion) for 2020, which assumes a deficit of 1.52% of the estimated gross domestic product – around N2.18tr – to be funded through foreign and domestic borrowing.
The debt office said it has managed to stretch out the maturity profile of its borrowings in favour of longer-term debt and plans to introduce a 15-year maturity for the first time and sell a new 30-year bond, which it launched last year, to extend the maturity profile of its debt.
Last year, foreign investors cut their participation in Nigerian government bond auctions after yields fell and oil prices drop reignited fears that the currency could come under pressure.
Yields have fallen from as high as 15% to around 11% for the benchmark 10-year bond.