Nigerian Government Has Borrowed N7.1 Trillion In 2 Years
The Nigerian government has borrowed N7.1 trillion in the two years of the President Muhammad Buhari administration thereby increasing the country’s debt to local and international creditors to N19.16 trillion, data from the debt management office shows.
In 2017 alone the government has borrowed N1.8 trillion. As at March 2015 the country’s total debt stood at N12.06 trillion, the Punch is reporting.
Of the N19.16 trillion, N11.97 trillions is owed domestic creditors as opposed to the N8.5 trillion owed them two years ago.
Similarly, the country’s external debt (for the federal and state governments) rose from $9.46bn to $13.81bn. This means that within the two-year period, the country’s external debt rose by $4.35bn or 45.98 per cent.
The external debt component, however, has been affected by exchange rate variations as the last two years have witnessed noticeable changes in foreign exchange rates.
According to the DMO, the official exchange rate of N306.35 to $1 was used in calculating the country’s external debt for March 31, 2017, while the official rate of N197 to $1 was used in determining the foreign debt for March 31, 2015.
Following the fall in the prices of oil, the country’s main export, the government has increasingly depended on borrowing even to carry out routine responsibilities.
Although foreign debts are accounted as cheaper than domestic debts, the government has increasingly depended on domestic sources of borrowing as foreign donors place more stringent conditions before granting credit facilities to the government.
To raise the required funds from the domestic debt market, the Federal Government has been active in the market with a number of instruments, including FGN Bonds and the Nigeria Treasury Bill. It recently floated a new instrument known as the FGN Savings Bond.
The International Monetary Fund had recently projected that Nigeria’s indebtedness would climb to 24.1 per cent of the nation’s Gross Domestic Product by 2018. It said that the country’s current indebtedness would have reached 23.3 per cent of the GDP by the end of 2017.
The World Bank and the International Monetry Fund have expressed concern over the country’s raising debt profile saying he huge cost of servicing the debt may render the country’s debt unsustainable.
A total of N1.84tn was provided in the 2017 budget for debt servicing.
Nigeria’s debt profile is dominated by local debts, which are characterised by high interest rates. Efforts are being made to secure more foreign debts and reduce the exposure of the Federal Government to the domestic debt market.