Nigeria’s domestic debt rises to N4.87tn – DMO

Nigeria’s domestic debt now stands at N4.87tn, the Debt Management Office has said.

Statistics obtained from the DMO website on Thursday, showed that the nation’s domestic debt rose by 8.22 per cent from N4.5tn at the end of December 2010, to N4.87tn as at March 31, 2011.

A chunk of the domestic debt was incurred through the Federal Government of Nigeria bonds with maturity dates ranging from three to 20 years. The bonds were being issued by the DMO on a monthly basis.

According to statistics from the debt office, FGN bonds accounted for N3.06tn or 62.78 per cent of the total debt profile.

The Nigerian Treasury Bills contributed N1.44tn or 29.57 per cent to the debt stock, while Treasury Bonds account for N372.9bn or 7.7 per cent.

The Director-General, DMO, Dr. Abraham Nwankwo, had recently explained that the nation’s growing domestic debt would help to deepen the market in order to provide a vital source of funding for government’s budget deficits.

He had said, “The DMO reintroduced the issuance of sovereign bonds in 2003 but started regular bond issuance in 2005 based on a programmed monthly issuance calendar. With external borrowing limited to concessional windows, borrowing from the domestic market became the main source of raising capital by the Federal Government for funding its activities.

“The policy shift towards the development of the domestic market was anchored on the desire to not only finance government budget deficits, but also provide the much needed platform for raising long-term capital for funding public and private sector projects, insulate the domestic economy from external contagion, develop the domestic capital market and provide a benchmark for pricing other financial instruments in the system in line with global best practices.”

Consequently, as at December 31, 2010, domestic debt accounted for 86.71 per cent of the nation’s total debt stock which stood at about N5.19tn.

The DMO Annual Report and Statement of Accounts 2009 showed that the country spent $3.18bn on debt servicing in 2007. This increased to $4.05bn in 2008 and dropped to $2.34bn in 2009.

In terms of proportion, the domestic debt component accounted for 67.91 per cent, 88.54 per cent and 81.67 per cent of the debt servicing expenditure in 2007, 2008 and 2009 respectively.

External debt, on the other hand, accounted for 32.09 per cent, 11.46 per cent and 18.33 per cent of the total debt servicing expenses in 2007, 2008 and 2009 respectively.

Nwankwo said the concern of the citizens on the level of the nation’s debt had been taken into consideration by the Federal Government.

He, therefore, said that deficit financing had been reduced from 6.02 per cent in 2010 to 3.62 per cent in 2011. This, he noted, would further reduce to 2.88 per cent and 2.62 per cent in 2012 and 2013 respectively.

He added that the nation’s domestic debt had not reached a level where the public sector could be said to have crowded out the private sector from the debt market as the World Bank had noted.

He said the agency was developing a plan for helping the private sector to access the bond market for long-term funding needs.