Nigeria’s total debt stock comprising the debts of the Federal Government, 36 states and the Federal Capital Territory (FCT) as at September 2019 now stands at N26.215 trillion
Director General of the Debt Management Office (DMO), made this disclosure in Abuja yesterday at the presentation of public debt data as at September 2019.
According to Oniha, “the comparative figure for September 2018 was N25.701 trillion which implies that in the 12 months period to September 2019 the Total Public Debt grew by 16.88%.”
The DMO boss also stated that the total public debt as at September 2019 includes promissory notes in the amount of N812.650 billion which had been issued to settle the FGN’s arrears to oil marketing companies and state governments under the promissory programme approved by the Federal Executive Council and the National Assembly.
Speaking specifically about the borrowing and how it helped bring Nigeria out of recession, Patience Oniha noted that “borrowing came in to fund the budget which included capital projects so when you finance capital projects, you create an entire economy around that in terms of employment, in terms of materials that you buy, in terms of what happens in the environment so there are vendors selling all sort of things so that is the description. We are talking about the multiplyer effect of borrowing to finance capital infrastructure and what we generate.”
Patience Oniha spoke about government issuing promissory notes to its creditors, arguing that “these are arrears so it’s not that they did a contract for us now and then we decided to issue a promissory note. These are arrears from several years prior to 2017. It is voluntary on the part of the creditor you don’t have to take a promissory note. You can wait when government has money in its budget to pay you. There are provisions in the budget just that they are not large so you can’t be sure when you will get it but you can wait there is no compulsion around it.”
With regards to new borrowings, she stated that “the level of new borrowings in the Appropriation Acts declined consistently since Nigeria exited the recession in 2017.
She reiterated that “the increase in the new borrowings in the Appropriations Acts between 2015 and 2017 was due to the need to stimulate growth and create jobs in the economy as contained in the Economic Recovery Growth Plan (ERGP).”
According to her, “whereas the 2019 Appropriation Act provided for a total new borrowing of N1.605 trillion split equally between domestic and external, only the domestic component of N802.82 billion was raised due to the late passage of the 2019 Appropriation Act and the expectation that the implementation of the 2020 budget would commence on January 1, 2020.”
Amongst the highlights of the DMO’s achievements for 2019 was the issuance of a 30-year FGN bond for the first time. The 30-year bond she explained “was to meet the investment needs of long-term investors such as insurance companies and support the development of the domestic financial markets in areas such as mortgages.”
From the federal government’s perspective the 30-year bond has contributed to reducing the refinancing risks of the public debt stock. According to her, “the product has enjoyed a strong demand as N284.391 billion had been issued by the end of September 2019.”
