Statistics from Nigeria’s Debt Management Office, DMO, shows that the country’s debt profile stood at N16.29 trillion in June this year, indicating a N4.17 trillion increase from the N12.12 trillion it was in June 2015.
The figures represent 34.41 percent increase in the total debt of Nigeria within the period in review – June 2015 to June 2016.
According to a PUNCH report, a breakdown of the country’s debt profile shows that external debt by the federal and state governments stood at $11.26 billion or N3.19 trillion as of June 30, 2016; from $10.32 billion or N2.03 trillion in July last year.
The Central Bank of Nigeria’s official exchange rates of N283 to $1 as of June 30, 2016, and N197 as at December 2015 were used to arrive at the naira equivalent of the foreign debt status, according to the DMO.
As at June 2016, “the domestic debt of the Federal Government stood at N10.61 trillion as of June this year, up from N8.4 trillion a year ago,” the PUNCH reported.
Also, the domestic debt of States as at the end of June this year, was put at N2.5tn, showing a 47.93% or N810 billion increase from the N1.69tn it was in July 2015.
The report stated that “FGN Bonds remained the dominant instrument for borrowing from the domestic market, as it accounted for N7.47tn or 70.46 per cent of the Federal Government’s domestic debt profile.”
It is followed by the Nigerian Treasury Bills which accounted for N2.9tn or 27.36 per cent of the Federal Government’s domestic debt profile.
While Treasury Bonds accounted for N230.99bn or 2.18 per cent of Federal Government’s domestic borrowing.
The PUNCH also reports that a DMO document, ‘Nigeria’s Debt Management Strategy 2016-2019’, revealed that at least 30% of the nation’s domestic debt would fall due within a one-year period.
It added that refinancing the 30% component of the domestic debt posed high risk to the economy because of high interest rate.
It would be recalled that Monetary Policy Committee of the CBN, on Tuesday, voted unanimously to retain interest rate at 14 percent for the second month running.
CBN governor Godwin Emefiele explained that the apex bank was certain that cutting rates without appropriate fiscal plans may not help the economy.
The move was against the pleas by the Finance Minister, Kemi Adeosun, that interest rates should be lowered so that government will not have to pay more in servicing its domestic debts.