Nigeria’s current total debt portfolio (both external and domestic debt), including Federal and State Governments, was $40.032 billion or N6.189 trillion as at September 30, 2011.
The Federal Government owes $3.316 billion (or 58.87 per cent) out the $5.633 billion total external debt s portfolio, while various states in the Federation owe $2.317 billion (or 41.13 per cent).
The remaining $34.399 is made up of domestic debts.
The Director General of Debt Management Office (DMO), Abraham Nwankwo made these revelations in an interactive session with the House Committee on Aid, Loans and Debt Management at the National Assembly yesterday.
Speaking before the Adeyinka Ajayi-heade House committee, Nwankwo said the DMO was established during the regime of former President Olusegun Obasanjo and that it led to an appreciable drop of the external debt from over $35 billion (41.86 per cent) of GDP in 2004 to $3.55 billion (3.7 per cent) of GDP in 2006.
According to him, , Nwankwo disclosed that the agency issued the National Debt Management Plan (2008-2012) to ensure effective management of the country’s debt portfolio and guide against excessive and uncoordinated borrowing.
He said: “DMO reintroduced the issuance of sovereign bonds in 2003 but started regular bond issuance in 2005 based on a programmed monthly issuance calendar” as well as 3-year, 5-year, 7-year, 10-year and 20-year are being issued monthly.
The DMO boss said his establishment also conduct Debt Sustainability analysis (DSA) as part of measures towards monitoring the dynamics of the country’s debt sustainability under changing internal and external scenarios.
Nwankwo said that there was public outcry against the nation’s debt portfolio in the past but that “between 2004 and 2006 the implementation of the exit from Paris Club was completed such that Nigeria was forgiven 60 per cent of the $30 billion foreign external debt, so that apart from $18 billion was written off while $12 billion was paid and so we completely exited.”
He said: “It is important to note that there was a challenge and discussion as to it was not preferable for Nigeria to go ahead and use the $12 billion that was paid as at that time to pursue the development objectives. But when we looked closely into the implications of being a defaulting and bad debt nation, you will appreciate that it was a better option to pay-off the $12 billion and for us to be forgiven $18 billion.
“Prominent issue in this regard was the fact that, because of our debt default situation, we are economically, commercially a barren country if not politically as well. And implication was that, our businessmen (private sector) were at disadvantage in terms of relationships, transactions, assess to capital within international capital market (economy).
“Under that situation, Nigerian businessmen were asked to make 100 per cent cash payment before they could secure goods from other countries either for capital goods or raw materials. Under normalcy, for a businessman to obtain certain concessions from their suppliers such that they need not make 100 percent cash payment before they take goods and services.”
Nwankwo said because of the country’s high debt situation at the time, “facility was lost to Nigerian businessmen, which means production in Nigeria become uncompetitive, so our businessmen were at disadvantage. Of course this has relationship with total economic activity, to cost of production, growth of our private sector, to generation of employment, though it was important that that issue be dealt with, so that the private sector which is usually the engine of growth usually a major source of employment would found its feet. This was one of the most advantages of finding a way of exiting from the Paris Club debt.”
He said of the $30 billion debt owed the Paris Club, $12 billion was paid and $18 billion written off.
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DMO: Nigeria owes $40.032b