A breakdown of the country’s debt profile as obtained by Punch shows that external debt by the federal and state governments stood at $11.26bn or N3.19tn as of June 30, 2016. It was $10.32bn or N2.03tn by July last year.
According to the DMO, the Central Bank of Nigeria’s official exchange rates of N283 to $1 as of June 30, 2016, and N197 as at December 2015 were used in arriving at the naira equivalent of the foreign debt status.
The domestic debt of the Federal Government alone stood at N10.61tn as of June this year, up from N8.4tn a year ago.
It shows that within 12 months, the Federal Government’s domestic debt profile rose by N2.21tn or 26.31 per cent.
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The domestic debt of the states stood at N2.5tn at the end of June this year, whereas it was N1.69tn in July 2015. This means that within a period of one year, the domestic debt of the states rose by N810bn, an increase of 47.93 per cent.
The Nigerian Treasury Bills accounted for N2.9tn or 27.36 per cent of the Federal Government’s domestic debt profile.
Treasury Bonds, on the other hand, accounted for N230.99bn or 2.18 per cent of Federal Government’s domestic borrowing.
The DMO, in a document said, ‘Nigeria’s Debt Management Strategy 2016-2019’, said at least 30 per cent of the nation’s domestic debt would fall due within a one-year period.
It stated, “This debt stock is slightly lower than the published FGN’s total debt stock of $55,576.28m (N10,948,526.57m), because the Debt Management Strategy tool treats the NTBs stock based on the discount values and not on the face values; while for the external debt, the tool aggregates the debt by tranche and currency, and applies a common end-period exchange rate. These gave rise to the observed difference.
“The implied interest rate was high at 10.77 per cent, due mainly to the higher interest cost on domestic debt. The portfolio is further characterised by a relatively high share of domestic debt falling due within the next one year.
“Interest rate risk is high, since maturing debt will have to be refinanced at market rates, which could be higher than interest rates on existing debt. The foreign exchange risk is relatively low given the predominance of domestic debt in the portfolio.”
Recall that in Apri, the Debt Management Office, DMO said the Nigeria’s domestic and external debts profile as at December 31, 2015 stands at N12 trillion, noting that the 2016 appropriation budget allows government to borrow an additional N1 trillion, eight hundred and eighty four billion.