Nigeria’s debt profile stands at $66.63bn

Stories by Amaka Ifeakandu
Lagos

The nation’s total foreign and domestic debt stocks as at September 2017 stood at $66.63 billion or N20.373 trillion.
The country’s debt profile for the federal and 36 states showed a continuous rise in the last two years, growing from $10.718 billion in 2015 to $11.406 billion in 2016, hitting $15.352 billion or N4.693 trillion at the end September, 2017.
Available data from Debt Management office posted on its website also indicated that Federal government domestic debt within the period under review stood at $40.869 billion or N12.495 trillion.
The data revealed that domestic debt of States government went to $10.142 billion or N3.183 trillion.
Meanwhile, the debt management office recently listed $300 million diaspora Bond and $3 billion dual tranche Eurobond issuances at the Nigerian Stock Exchange ( NSE).
The Director General of DMO, Patience Oniha
While addressing journalists said that the funds raised would be applied towards developing key infrastructure, with proceeds to be used for budgeted capex .
She said that apart from supporting the FGN’s drive towards economic diversification from oil revenues, the bond would help to sustain momentum in tapping the international markets.
She said that the cost of borrowing in the domestic market is high, adding that government decided to borrow externally at lower interest rate to use the fund to pay for the treasury bills maturing December last year.
Explaining further she said most of our borrowing is in the domestic market and cost borrowing internally is high. It will be lower to borrow externally than to borrow domestically at 17-18 per cent per cent interest rate.
She however said that the $3 billion dual tranche eurobond represents the largest ever single offering from sub Sahara issuer and longest tenored Bond for a substantial issuer. She pointed out that the eurobond was issued in tranches of $ 1.5 billion 10-year note at the rate of 6.50 per cent and $1.50 billion 30-year note at 7.625 per cent.
The DMO boss also said that funding the budget deficit and refinancing the government’s inherited debt portfolio have been the key drivers behind the capital raising plans.
She said that the government effort would lead to significant benefits particularly a reduction in the cost of funds.
She said the way forward is “to achieve positive impact on overall macroeconomic management, including monetary and fiscal policies, continue to implement a very prudent fiscal and debt management strategy to reduce the cost of our debt, rebalancing our domestic and international debt portfolio to 60:40 split over the coming years.”
The DMO had earlier dismissed the fears of some Nigerians that the rising debt profile of Nigeria impact negatively on the economy.
Investors may take short-term investment as election plan draw closers
Financial analysts have predicted that the nation’s reform window will start to close during 2018 with elections planned for February 2019, pushing investors to take a short term position on the country.
Renaissance Capital strategist, Daniel Salter said that, factors under watch by investors include president frequently absent for health treatment, debt service of 62 percent of revenues major constraint on investments in infrastructure to support longer-term growth, risk of inflation remaining sticky in 2018 if pre-election spending requires monetisation of the deficit.
Salter said that the Niger Delta Avengers have suspended their ceasefire and this could potentially lead to a resumption of attacks on oil infrastructure.
A financial expert, Mr, Yinka Adewale pointed out that elections in many countries across the world come with certain economic risks and often increase in the level of uncertainty for investments.
He said in the case of our country the situation is sad because the risks are sometimes so high as to totally discourage new investments while existing investors may even seek to exit our market. This according to him impact negatively on the growth of the economy, adding that this could only be addressed by ensuring strong institutions, and respect for contracts and due process regardless of changes in government.
A report showed that in the frontier market, Ivory Coast, Senegal and Bangladesh are the fastest growers (all at or above 7 per cent YoY); while Bahrain, Nigeria and Lebanon are forecast to have slowest growth. But the International Monetary Fund growth forecasts of 0.8 per cent in 2017 and 1.9 per cent in 2018 are still negative in per capita terms; Sub-Saharan Africa (SSA) economist Yvonne Mhango’s growth forecasts are only slightly higher: 0.7 per cent in 2017 and 2.0 per cent in 2018.
Kuwait, Oman and Nigeria are forecast to have the fastest growth accelerations, while Morocco, Slovenia and Romania are forecast to have the worst slowdowns
The investors’ and exporters’ (I&E) forex window which has now been operational for six months enabling international investors to invest and repatriate capital has allowed MSCI to terminate its review of Nigeria for potential removal from MSCI Frontier.

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