Nigeria’s total debt stock as at December 2021 stood at N39.556 trillion.
Director General of the Debt Management Office (DMO) Ms. Patience Oniha made the disclosure at a media interaction on Nigeria’s debt levels at the end of 2021.
Oniha said other arms of government are also responsible for Nigeria’s growing debt.
According to her: “It is not only the President and the Minister of Finance that endorse borrowing. The National Assembly passes the budget which contains how much will be borrowed after dudget defence and public hearings”.
Speaking on the country’s ballooning debt profile, Oniha stated: “Borrowing came from the budget. The figures didn’t just happen. They came from many years of consecutive borrowing authorized by existing laws”.
She also disclosed that Nigeria’s debt to GDP is now 22.47 percent which is within the 40 percent threshold allowed by the World Bank.
Nigeria raises $1.25b through Eurobonds
Meanwhile, Nigeria has raised $1.250 billion seven-year Eurobond in the International Capital Market (ICM).
A statement yesterday by the Debt Management Office (DMO) said that the success “makes Nigeria the first African country to access the ICM in 2022”.
The agency explained that the Eurobond proceeds ”will be used to finance critical capital projects in the 2022 budget to bridge the deficit in infrastructure and strengthen Nigeria’s economic recovery”.
It added that the $1 250 billion “will contribute directly and in full to the level of Nigeria’s External Reserves”.
According to the DMO, Nigeria’s ability to access the ICM at this time “is a confirmation of her established presence in the ICM and engagement with investors on a continuous basis.”
It disclosed that “the offer was launched at an Initial Price Thoughts of 8.75 percent per annum and on the back of strong investor demand, Nigeria was able to revise the price guidance to 8.5 percent per annum.
The agency added that “with strong investor interest(in the instrument), the price was tightened to 8.375 percent per annum. The Order Book still remained high at $3.676 billion and retained quality investors”
The DMO said that Nigerian investors participated in the offer with a total subscription of $60 million.
The agency had also said in Abuja that Nigeria’s N39. 556 trillion debt stock covered external and domestic debts of the Federal Government, the 36 states of the federation and the Federal Capital Territory (FCT).
It’s Director-General, Patience Oniha, told reporters at a news conference that the debt portfolio would continue to rise so long as the country continues to finance its budgetary deficit.
She however stated that there was no cause for worry as “future generations would benefit from the borrowings.”
Oniha explained that the 2021 debt stock “included the 2021 Appropriation and Supplementary Acts consisting of the total new borrowings (from Domestic and External sources) of N5.489 trillion to part-finance the deficit.”
Borrowings for this purpose and disbursements by multilateral and bi-lateral creditors she said “account for a significant portion of the increase in the debt stock. Increases were also recorded in the debt stock of states and the FCT.’’
The DMO boss noted that the new borrowings were “realised from diverse sources, primarily through the issuance of the Eurobonds, Sovereign Sukuk and FGN Bonds.”
The borrowings, she said, were used “ to finance capital projects and support economic recovery”.
Oniha also revealed that the total public debt stock to Gross Domestic Product (GDP) as at December 31, 2021, now stands at 22.47 per cent. .
“The Debt-to-GDP ratio still remains within Nigeria’s self-imposed limit of 40 per cent” she said.
The DMO boss described the ratio as “prudent when compared to the 55 per cent limit advised by the World Bank and the International Monetary Fund (IMF) for countries in Nigeria’s peer group, as well as, the ECOWAS Convergence Ratio of 70 per cent”.
The Federal Government, according to her, “is mindful of the relatively high debt-to-revenue ratio and has initiated various measures to increase revenues through the Strategic Revenue Growth Initiative and the introduction of Finance Acts since 2019.”.
Reacting to concerns raised by Nigerians that the rising debt profile, Oniha said it was ”because we borrow to finance deficit” and global developments.
She exonerated President Muhammadu Buhari and Finance Minister Zainab Ahmed for being solely responsible for the rising debt profile.
According to her, before any debt is incurred, the National Assembly plays a major role in it.
”Borrowing came from the budget and the National Assembly authorised it. These figures didn’t just happen. Many years of consecutive borrowing also contributed to the annual growth of the total debt stock,” she said.
The DMO boss lamented that Nigeria has a debt servicing problem because of its poor revenue situation.
Her words: “Nigeria has a revenue problem, not a debt problem but we have a debt servicing problem too. The United States and Canada have larger debts than we do but because they have good revenue sources, they have the capacity to service their debts”.
Oniha assured that Nigeria would continue to pay the loans as they mature. “
On Chinese loans, she said: “We are diversifying our sources of borrowing and not depending on one source. China is not our major source of funding.”.
