The Debt Management Office (DMO) says the nation’s total debt to Gross Domestic Products (GDP) ratio now stands at 20.77 per cent against the 21.50 per cent in December 2011. Its Director-General, Dr Abraham Nwankwo, disclosed this in Enugu on Friday at an international media briefing and interaction on “Advances in, and Status of Public Management”.
He also said that the debt to GDP ratio should not exceed 20-25 per cent threshold and there was government’s commitment to ensure that it did not rise beyond 30 per cent. Nwankwo said that the threshold set for countries in the rank of Nigeria was 40 per cent.
The DMO boss said that in spite of that the 40 per cent threshold, the nation had decided to remain conservative by ensuring that it would not exceed 25 per cent by 2015. He, however, said that there was the possibility that the country’s debt to GDP could reach 30 per cent in the future, adding that borrowing was part of modern economy.
He said that the nation’s domestic and external debt stood at N6.49 trillion and 6.67 billion dollars, respectively as at March.
Nwankwo said that the government had not relented in its effort to introduce the inflation-linked bond whose coupon rate would increase as inflation increased. He said that part of the N577 trillion to be raised by government from the domestic bond market to finance the nation’s deficit for the year would be inflation-linked bond.
He also said that plans to go to international capital market to raise one billion dollar euro bond was still on course, adding that the fund would be used specifically to transform the power sector.
The DMO boss assured Nigerians that “hot monies” from the portfolio investors should be considered safe, saying that the European economy might not regain from the recession in the next five years. He stressed that “hot monies” from foreign direct inflow into the country were safe.
Nwankwo also disclosed that 20 Nigerian companies raised about N200 billion from the domestic bonds market between 2005 and 2012 to fund the real sector. He described the developments as part of the achievements of the transformation agenda of the current administration.
“This is important because it is in a process of managing Nigeria’s public debt that we develop the market to become useful for the private sector.
“Less than seven years, at least 20 companies in Nigeria have gone to market to fund the real sector of the economy. This has nothing to do with the government. It has to do with what we have done to transform the market,” he said.
Nwankwo said that the DMO had transformed the market to raise long-term funds of up to 20 years from the market.