By Emma Ujah, Abuja Bureau Chief
The Debt Management Office (DMO) has raised N410 billion from the domestic capital market as public borrowings to fund the 2018 budget. The federal government had indicated that N1.6 trillion would be borrowed to finance about N1.95 trillion deficit contained in the budget.
Disclosing this at a press briefing in Abuja yesterday, the Director-General of DMO, Ms, Patience Oniha, also said the nation’s public debt stood at N22.4 trillion as at end of June ($73. 31b) of which $22 billion was external.
She explained that when compared to the debt figure for March 2018, the Public debt stock decreased by 1.4 percent from N22.7 trillion in March 2018 to N22.4 trillion in June 2018.
“The decrease was due to a 3.4 percent decline in the FGN’s Domestic Debt Stock between March and June 2018,” she said.
Explaining the governments resort to borrowings to fund the budget, Oniha stated further: “We witnessed as much as 50 per cent drop in revenue. Government had to borrow to function.
“Even if we don’t take new loans, the devaluation of the Naira from about N165/$1 to N305/$1 created increment arising from exchange rate differential. But what I can assure you is that we are better off than where we are coming from.”
“A major highlight in the Public Debt Data was the consistent decrease in the FGN’s Domestic Debt which declined from N12.589 trillion in December 2017 to N12.577 trillion in March 2017 and N12.151 trillion in June 2018, occasioned by the implementation of the Debt Management Strategy of the DMO.”
According to Oniha, the reduction in the FGN’s Domestic Debt Stock arose from the redemption of N198 billion Nigerian Treasury Bills in December 2017 and another N639 billion between January and June 2018.
A total of $3 billion was raised through Eurobonds to refinance maturing domestic debt as part of the implementation of the debt management strategy for the purpose of substituting high cost domestic debt with lower cost external debt to reduce debt service costs for the Government.
Oniha said that the debt was still sustainable at about 18 per cent of the GDP and that her team’s Debt Management Strategy has crashed interest rate to a region of 11-14 percent from about 18 percent last year.
Oniha explained that the implementation of the Public Debt Management Strategy with an overall objective of ensuring that Nigeria’s debt remained sustainable, was yielding desired results.
“One of the beneficial outcomes is the rebalancing of the debt stock; the ratio of domestic debt to external debt inching towards the target of 60:40 and the target of 75:25 between long term domestic debt and short term domestic debt.”