Dwindling Revenue: Nigeria’s Debt Profile Hits N42.84trn

Dwindling Revenue: Nigeria’s Debt Profile Hits N42.84trn
  • Debt to GDP ratio increase from 23.06 to 23.27% 
  • Reps lament Nigeria’s rising debt profile
  • To launch national financing framework

 By Charles Ebi And Yahaya Umar

Debt Management Office has disclosed that Nigeria’s total public debt stock has increased from N41.

60trn as of March 2022 to N42.84trn as of June of the same year, showing an increase of N1.24trn in three months. This was contained in a press statement published on DMO’s website.

The Federal Government’s appetite for borrowing continued in the second quarter of this year with the debt stock rising by N1.24trn to N42.84trn.

Similarly, Nigeria’s debt-to-GDP ratio rose to 23.27% in the first quarter of the year, compared to 22.47% as of December 2021. While this is lower than the self-imposed limit of 40%, the rate is quickening faster, due to increased borrowing and tepid economic growth.

According to the DMO, the Federal Government was unable to secure any foreign loans in the second quarter of 2022. It noted that external debt remained the same at N16.61trn, $40.06bn, from Q1 to Q2 2022, adding that 58% of external debt was concessional and semi-concessional loans from multilateral lenders such as the World Bank, International Monetary Fund, Afrexim, African Development Bank and bilateral lenders, including Germany, China, Japan, India and France.

The statement read in part, “Total Public Debt Stock, representing the Domestic and External Debt Stocks of the Federal Government of Nigeria, the 36 State Governments and the Federal Capital Territory, was N42.84tn ($103.31bn) as at June 30, 2022. The comparative figures for March 30, 2022, were N41.60trn ,$100.07bn”.

It also noted that domestic debt rose to N26.23tn ,$63.24bn, due to new borrowings by the government to part-finance the deficit in the 2022 Appropriation, Repeal and Enactment Act, as well as new borrowings by state governments and the Federal Capital Territory.

The DMO further said that the “Total Public Debt to Gross Domestic Product” as at June 30, 2022 was 23.06% compared to the ratio of 23.27% as at March 36 2022, adding that the debt service-to-revenue ratio remained high.

According to the agency, Nigeria’s total public debt stock includes new domestic borrowings by the federal government, which was used to partly finance the 2022 budget deficit.

The debt stock also includes $1.25 billion Eurobond issued in March 2022 and disbursements by multilateral and bilateral lenders.

Similarly, there were also increases in the debt stock of the various state governments and the federal capital.

A breakdown of the debt stock shows that federal government domestic debt increased by 3.99% in the first three months of the year to $48.45 billion from $46.59 billion recorded as of December 2021.

In the same vein, states’ domestic debt increased by 7.91% to stand at $11.65 billion as of March 31, 2022. This represents an $853 million increased quarter-on-quarter. In all, total domestic debt rose by 4.73% to stand at $60.1 billion.

A further look at the Federal Government debt stock by instrument, FGN Bonds accounted for 70.7% of the total domestic debt at N14.24 trillion.

Similarly, Nigerian Treasury Bills accounted for 21.88% with a total of N4.41 trillion debt stocks.

On the other hand, external debt rose by 4.08% to stand at $39.96 billion, compared to the previous quarter.

The Federal Government in the review period spent a total of N668.69 billion on domestic debt service, which is 115% higher than the N310.49 billion spent in the previous quarter and 9.1% more than the N612.71 billion incurred in the corresponding period of 2021.

External debt service surged to $548.79 million in Q1 2022 compared to $286.35 million spent in the previous quarter.

Meanwhile, the House of Representatives, at the resumption of plenary yesterday, expressed concerns over the rising debt profile of the country and crude oil theft.

The Speaker, Hon. Femi Gbajabiamila, while delivering his welcome remarks after their long recess, noted that some concerns emerged from the Senate and House Committees on Finance interactive sessions with the Ministries, Departments and Agencies ,MDAs, of the government on the Medium Term Expenditure Framework and Fiscal Strategy Paper, during which issues emerged on the scope of deficit financing to be proposed in the new budget and decline in crude oil production due to theft and sabotage.

Gbajabiamila said while the House appreciates that the current fiscal conditions necessitate borrowing to finance budgetary expenditures, he however, said there should be worry about the long-term impact of the debt burden on the country and the ability to pay the debt in a responsible and sustainable way. 

These concerns, he said, will be central to consideration of the 2023 Appropriation Bill when presented and appropriations for new projects for MDAs will be influenced by the extent to which existing projects have been funded and their performance in executing these projects as intended.

It would be recalled that AljazirahNigeria had reported that the Federal Government revealed its plan to increase the N30,000 minimum wage in the light of worldwide inflation ravaging the global economy.

The Minister of Labour and Employment, Dr Chris Ngige, disclosed this in Abuja at the Nigeria Labour Congress public presentation titled, “Contemporary History of Working-Class Struggle”.

According to him, the adjustment had become important to reflect what was happening globally.

He said, “The inflation is worldwide, we shall adjust the minimum wage in conformity with what is happening now. The 2019 Minimum Wage Act has a new clause for a review. The adjustment has started with the Academic Staff Union of University because the stage they are at with their primary employers, the Ministry of Education, is a collective bargaining agreement negotiation.

 “Under the principles of offer and acceptance, which is that of collective bargaining, ASUU can look at the offer they gave us and make a counter offer, but they have not done that. If they do that, we are bound to look at their offer. These are the ingredients of collective negotiations”.

He added, “If you don’t work, you won’t eat”, saying that labour provides the riches of any nation as well as the prosperity of every family.

He, however, advised the executives of affiliate unions of the Nigeria Labour Congress to familiarise themselves with labour laws.

Plans, he added, were being put in place to convert the Michael Imoudu Institute of Labour Studies, Ilorin, Kwara State, into a degree-awarding institute.

He said that in the current economic situation, the current minimum wage of N30,000 would not, in the present economic reality, pay workers’ transportation fares to work for a month.

Also speaking, President of the Trade Union Congress, Festus Osifo, who said that the sole aim of the labour movement in the country was to protect the interest of workers, noted that if not for the struggle of the founding fathers of the movement in the country, the story would have been different today.

In a move to lay out a strategy to increase investments for sustainable development, manage financial and non-financial risks, and ultimately achieve sustainable development priorities, President Muhammadu Buhari will on Friday launch Nigeria’s Integrated National Financing Framework, INFF, for Sustainable Development on the margins of the 77th session of the United Nations General Assembly ,UNGA77, in New York.

Proposed within the broader Addis Ababa Action Agenda, the Integrated National Financing Framework, INFF, is a planning and delivery tool to finance sustainable development at the national level.

The INFF helps policymakers lay out a strategy to increase investments for sustainable development, manage financial and non-financial risks, and ultimately achieve sustainable development priorities. While a country’s national development plan spells out what needs to be financed, the INFF shows how it will be financed and implemented.

For Nigeria, the INFF is also expected to help in the recovery from the effects of COVID-19 pandemic as well as help address lack of an integrated approach to financing SDGs, which has been a key challenge to meeting the financing requirement, estimated at $100 billion over the next 10 years.

The 2030 Agenda for Sustainable Development presents an ambitious, complex and interconnected vision that countries around the world have committed to working towards. Realizing this vision will require mobilization of a diverse range of public and private resources.

The INFF is a tool to help countries strengthen planning processes and overcome existing impediments to financing sustainable development at the national level. It helps governments and their partners to build more integrated approaches to financing that strengthen the alignment between public and private investments and longer-term sustainable development objectives and build greater coherence across the governance of public and private financing policies.

According to a statement by Presidential spokesman, Femi Adesina, Nigeria committed to be a champion of INFF and officially kicked off the design process as an INFF pioneer country in 2020. To steer the implementation process, Nigeria set up the INFF Steering Committee chaired by the Ministry of Finance, Budget and National Planning ,MFBNP, represented by the Minister of State, Budget and National Planning, the Governor of the Central Bank of Nigeria, the Executive Chairman of the Federal Inland Revenue Service, the Chairman of the Nigeria Governors Forum, the Director General of the Budget Office of the Federation, the Director General of the Debt Management Office, and the Statistician-General of the National Bureau of Statistics.

“Others are: the Senior Special Assistant to the President on SDGs, the UN Resident Coordinator, Resident Representative of the United Nations Development Programme, the Head of Development Cooperation of the European Union mission, the Resident Representative of the International Monetary Fund, the Country Director for the World Bank, and the Co-Chair of the Private Sector Advisory Group.

“Expected at the launch are some Heads of Governments, the Deputy Secretary General of the United Nations, Amina J. Mohammed and representatives from countries and international Organisations”, the statement read in part.

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