By Tony Obiechina, Abuja
The Debt Management Office (DMO) has disclosed that Nigeria’s total public debt increased to N89.71 trillion at the end of the third quarter of 2023.
The figure represents a marginal increase of 0.61 percent compared to N87.38 trillion recorded at the end of June.
The DMO, in a statement posted on its official X handle on Wednesday said domestic debt increased by N1.8trn while external debt reduced from $43.16 billion as of June 30 to $41.59 billion at the end of the third quarter.
The statement read, “The Total Public Debt as at Sept. 30 was N87.91 trillion or USD114.35 billion.
“The amount represents the Domestic and External Debts of the Federal Government of Nigeria, the 36 State Governments and the Federal Capital Territory (FCT).
“At N87.91 trillion, the Total Public Debt Stock represents a marginal increase of 0.61% when compared to the June 30, 2023 figure of N87.38 trillion.
“This trend is explained by the decrease in External Debt from USD43.16 Billion as at June 30, 2023, to USD41.59 Billion as at September 30, 2023, and a relatively moderate increase of N1.80 trillion in the Domestic Debt.”
The statement also noted, “External Debt decreased due to a redemption of a USD500 million Eurobond and the payment of USD413.859 million as first principal repayment of the USD3.4 billion loan obtained from the International Monetary Fund in 2020 during COVID-19.
“The servicing of these debts in addition to other debts are clear demonstrations of the FGN’s commitment to honouring its debt obligations”.
The DMO had earlier projected that Nigeria’s public debt burden may hit N77tn following the National Assembly’s approval of the request by former President Muhammadu Buhari to restructure the CBN’s Ways and Means Advances.
The Ways and Means Advances is a loan facility through which the CBN finances the shortfalls in the government’s budget.
The Director-General of the DMO, Patience Oniha, during a public presentation of the 2023 budget organised by the former Minister of Finance, Budget and National Planning, Dr Zainab Ahmed, noted that the debt would be N70tn without N5tn new borrowing and N2tn promissory notes.
However, the latest data showed that the current debt stock of N87.38tn exceeded the DMO’s projection by N10.38tn.
Further breakdown showed that Nigeria has a total domestic debt of N54.13tn and total external debt of N33.25tn.
While the domestic debt makes up 61.95 per cent of total debt, the external makes up 38.05 per cent.
The domestic debt rose by 79.18 per cent from N30.21tn while the external debt rose by 69.28 per cent from N19.64tn in Q1 2023.
In its 2022 Debt Sustainability Analysis Report, the DMO warned that the Federal Government’s projected revenue of N10tn for 2023 could not support fresh borrowings.
According to the office, the projected government’s debt service-to-revenue ratio of 73.5 per cent for 2023 is high and a threat to debt sustainability.
It noted that the government’s current revenue profile could not support higher levels of borrowing.
In a report titled, ‘Report of the Annual National Market Access Country Debt Sustainability Analysis (DSA),’ the debt office said, “The projected FGN Debt Service-to-Revenue ratio at 73.5 per cent for 2023 is high and a threat to debt sustainability.
“It means that the revenue profile cannot support higher levels of borrowing. Attaining a sustainable FGN Debt Service-to-Revenue ratio would require an increase of FGN Revenue from N10.49tn projected in the 2023 Budget to about N15.5tn.” READ ALSO:
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DMO stated that the government must pay attention to revenue generation by implementing far-reaching revenue mobilisation initiatives and reforms including the Strategic Revenue Growth Initiatives and all its pillars with a view to raising the country’s tax revenue to GDP ratio from about 7 per cent to that of its peer.
The Federal Government would be unable to borrow a lot as it nears its self-imposed debt limit of 40 per cent, the DMO said.
To reduce borrowing and budget deficit, DMO stated that the government should encourage the private sector to fund some of the capital projects that were being financed from borrowing through the public-private partnership schemes.
It added that the Federal Government can reduce borrowing through the privatisation and/or sale of Government assets.
Over the years, Nigeria’s low revenue generation has pushed the government to more borrowing.
However, President Bola Tinubu recently expressed his administration’s commitment to break the cycle of overreliance on borrowing for public spending, and the resultant burden of debt servicing it places on management of limited government revenues.
