Nigeria’s total domestic debt was N22.21 trillion as of the end of December 2022. By the end of June, this had risen substantially to N48.32tn.
To justify the increase, DMO said that the N22.71tn securitised FGN’s Ways and Means Advances, which were represented in domestic borrowings, were the biggest contribution to the public debt stock.
According to The PUNCH’s estimate, total domestic borrowings outside of securitized Ways and Means Advances would have been N25.60tn (indicating that total fresh domestic borrowing at the period was N3.39tn). Since the government’s entire domestic borrowing for 2023 was N7.04 trillion, The PUNCH combined overall domestic debt as of the end of December 2022 (N22.21 trillion) with fresh borrowing for the year (N7.04 trillion), and securitized Ways.
The overall domestic debt stock might have increased by 133.95 percent to N51.96 trillion by the end of 2023. This is based on fresh information provided by Patience Oniha, Director-General of the Debt Management Office.
She told CNBC Africa on the sidelines of discussions in Abuja for the establishment of the African Debt Managers Initiative Network, which is being spearheaded by the African Development Institute of the African Development Bank, that the Federal Government had raised N7.04 trillion in total new domestic borrowing in 2023.
Oniha said, “I am happy to say that in 2023, the new domestic borrowing was N7.04tn, and as we speak that has been raised in full. So, I don’t need to explain how we raised it, but it has been raised. When you compare it to the N3.5tn of last year. It tells you that the market has debt for us to raise money.”
Commenting on the makeup of debt, Oniha noted that several of the investors in the securities issued were institutions whose balance sheets were growing including asset managers, fund managers, including pension funds, insurance companies, and banks.
She stated, “We still had an auction this week. Subscription levels have been good, and the rates have been very responsible below the monetary policy rate, so it just tells you that there is liquidity.” She declared that the government expects its outing in the domestic market to continue in 2024.
When she was asked about the foreign market, the DMO DG noted that rates have been high due to high inflation rates.
She highlighted, “There is still uncertainty around the world from the Russia-Ukraine war. So foreign investors are a bit more cautious. Let’s use the word, risk-averse and they are investing in those securities that are triple A or double A rating that are offering them high rates, four per cent, five per cent.”
She, however, argued that based on available data It could be speculates that stability was returning to the market. Also commenting on revenue, Oniha decried the challenge that the country has faced with raising enough to meets its need due to high dependence on oil.
She added, “Several governments had tried to change that narrative, improve revenue, but now we see a presidential committee on fiscal reforms and taxes, so we expect the narrative to change to higher revenues. If you look at the MTEF for 2024 to 2027, you can see the direction in that regard.
“If you increase revenues, clearly your need for borrowing will be reduced. With your revenues, you can provide more services. But also, your debt-service to revenue ratio will be lower.”
According to DMO, Nigeria’s overall public debt increased to N87.38 trillion in the second quarter of 2023. The inclusion of the N22.712tn securitized FGN’s Ways and Means Advances was a significant addition to the Public Debt Stock.
Nigeria’s entire public debt stock was N87.38 trillion ($113.42 billion) as of June 30, 2023. It includes the Federal Government of Nigeria, the thirty-six states, and the Federal Capital Territory’s total domestic and external debts.
Wale Edun, Nigeria’s Minister of Finance and Coordinating Minister for the Economy, has stated that the country cannot rely on borrowing to fulfill its 2023 national budget. He stated that the government must make the required sacrifices in order to earn sufficient income to lower the country’s existing significant deficit finance.
He said, “Clearly, in the environment that we have now, internationally as well as nationally, we are in no position to rely on borrowing.
“We have an existing borrowing profile. Our direction for the tariff is to reduce the quantum of borrowing or intercept deficit financing in the 2024 budget. Simply put, internationally, there is a focus among rich countries on bringing down the inflation rate to stabilise the economies and give them the opportunity for investment growth.
“They are in the process of sacrificing that immediate goal of compacting their economies, or at least contracting the money supplies and pushing up the interest rates, and of course, high-interest rates and investments don’t go together.”
