FG, States Grow Debt by N12.27tn in 42 months
Nigeria’s debt profile rose by N12.27tn between June 2015 and December 31, 2018, investigation has shown.
Data obtained from the Debt Management Office on Wednesday showed that the country’s debt profile grew from N12.12tn as of June 30, 2015, to N24.39tn as of December 31, 2018.
This means that within a period of three and a half years or 42 months, the country’s debt profile rose by 12.27tn. This reflects 101.23 per cent increase in the country’s debt profile within the period.
Much of the debts belong to the Federal Government whose debt profile as of December 31, 2018, stood at N19.23tn. On the other hand, the debt profile of the subnational governments – the 36 states of the federation and the Federal Capital Territory – stood at N5.15tn.
This means that the 78.87 per cent of the public total debt as of December 31, 2018, belonged to the Federal Government while the subnational governments had a proportion of 21.13 per cent.
The external debt stock of both the states and the Federal Government rose from N2.03tn as of June 2015 to N7.76tn as of December 2018.
This means that within the period of analysis, the external debt of the country rose by N5.73tn. This reflects 282.27 per cent increase in the country’s external debt profile.
Although the status of the Federal Government’s component of the external debt as of June 2015 could not be ascertained, much of the growth in the country’s external debt profile occurred at the federal level.
Of the total public external debt profile as of December 2018, the Federal Government had a share of N6.47tn or 83.38 per cent while the states and the FCT had a share of N1.3tn or 16.62 per cent.
The growth in the external debt commitment within the period is in consonance with the Debt Management Strategy which targets to raise foreign debt component to 40 per cent of total debt profile.
This is intended to take advantage of the lesser cost of borrowing from foreign sources although experts have warned that there are some foreign exchange risks inherent in this strategy.
The Debt Management Office also believes that this strategy gives more room to private sector investors to explore the local debt market instead of allowing the government to dominate the market with the inherent possibility of increasing the rate of borrowing.