The Director-General of Nigeria’s Debt Management Office (DMO), Ms Patience Oniha, has allayed fears of some observers that the country was already in a debt crisis.
However, the debt office boss admitted that the nation was not generating enough revenue to fund some critical operations, but stressed that Nigeria was still capable of servicing her debts.
Ms Oniha, in a chat with newsmen on the sidelines of the International Monetary Fund and World Bank Group summit in Indonesia, noted that efforts were being done to avert a debt crisis in the Africa’s largest economy.
This, she said, federal government was doing by shoring up the revenue base by diversifying the economy.
“Debt crisis means you are no longer able to service your debts, which is what we are talking about. We can’t stop talking about it, the figures are there.
“I agree that we are not generating as much revenue as we should, but we are not in a debt crisis as many have feared,” Ms Oniha told journalists.
She said further that, “When you compare your revenue to your Gross Domestic Product (GDP), it is low and we cannot run from the fact that we need to generate more revenue.”
“Generating more revenue does not mean we should focus only on increasing production in the Niger Delta or praying for oil prices to rise, we have to generate long-term revenue. How do you generate that?
“You have to enforce compliance, which is all about increasing the tax base and making sure that those who are paying are paying the correct amount and not just paying a small amount to escape. The option that was talked about here about raising taxes,” she added.
Recall that earlier this month, analysts at FSDH Research had called on government to avert an imminent debt crisis in the country.
The firm had said in its report that the growth in Nigeria’s debt was higher than the growth in revenue, pointing out that Nigeria has the lowest government revenue to Gross Domestic Product (GDP) ratio at 6 percent among some selected countries.
According to the company, Nigeria’s over-dependency on crude oil revenue, combined with volatility in both the price and production of crude oil are the major reasons for sluggish growth in government revenue.
It said growing non-oil revenue will require that the Nigerian economic environment has inherent structures that can support business growth, noting that such structures include adequate physical infrastructure, policies, legal and regulatory frameworks that will make the economy business-friendly to generate taxable profits.
“Our analysis of the ratio of the interest payment on domestic debt relative to the FGN allocation from the Federal Account Allocation Committee (FAAC) shows that the FGN is spending too much of its revenue to pay interest on loans.
“This leaves the government with little resources to spend on critical sectors of the economy that could support strong growth and maintain a healthy economy to generate revenue,” it said.
FSDH Research said further that, “The current high interest payment relative to revenue may also increase the credit risk of the country. Although the government has been able to meet its debt obligations (interest and principal payments) so far, if the current situation is not addressed, the interest rate on government loans may increase because of the perceived elevated risk. This would also lead to higher interest rates for private sector operators.”
The firm disclosed that the external environment was becoming tighter than before because of the rising interest rate in the US.
Tag: DMO
-
Nigeria not in debt crisis for now —DMO
-
Fed Govt, states debts rise to $22b – DMO
The Debt Management Office (DMO) on Wednesday put Nigeria’s external debt stock at $22 billion.
Out of the amount, the Federal Government’s quotient is $17.8 billion, while the combined debt portfolio by the states and the Federal Capital Territory (FCT) stands at $4.28 billion.
Of the combined states’ figure, Lagos State, the commercial nerve-centre of Nigeria, has the highest foreign portfolio of $1.45 billion, or 33.88 per cent of the states’ debts.
The debt status from the DMO, were as a June 30, 2018. Going by the data, the Federal Government accounts for 81 per cent of the country’s external debt, while the states and the FCT account for 19 per cent.
Following Lagos in that sequence is Edo State which stands at a distant second with external debt of $279 million.
Others are Kaduna, $232.9 million; Cross River, $193.7 million; Bauchi, $134.9 million and Enugu, $127.9 million.
The DMO listed other debtor states as Anambra which is owing $107.4 million; Oyo, $106.34 million; Ogun, $105.3 million; Osun, $101.5 million and Abia, $100.2 million.
Others are Ekiti with a debt overhang of $97.9 million; Ondo $81.4 million; Rivers, $79.5 million; Ebonyi, $67.9 million; Kano, $65 million; Katsina, $64.7 million and Delta, $63.8 million.
The DMO said Imo incurred a debt of $61.2 million; Nassarawa, $61.4 million; Adamawa, $57.8 million; Niger, $55.7 million; and Bayelsa $57.2 million. Also in the foreign debt conundrum are Akwa Ibom with $48.3 million; Kebbi, $46.7 million; Kwara, $49.8 million and Sokoto $40.2 million.
At the tail end of the debt profile are Taraba, with $22.1 million; Borno, $22.2 million; Yobe, with $28.4 million and Plateau with $29.6 million.
Others are Kogi, with 32.37 million dollars; Jigawa, 32.80 million dollars; FCT, 32.83 million dollars; Zamfara, 34.2 million dollars; Benue, 34.7 million dollars and Gombe, 38.5 million dollars.
The Director-General of DMO, Ms. Patience Oniha, said as at June 30, the nation’s public debt stock increased marginally by 3.01 per cent from that of December, 2017.
“One of the beneficial outcomes is the rebalancing of the debt stock, the ratio of domestic debt to external debt inching towards the target of 60:40 and the target of 75:25 between long term domestic debt and short term domestic debt.
According to the figures for June 30 released by the DMO, the ratio between domestic and external debt stood at 70 to 30 compared to 73 to 27 in December, 2017.
Ms.Oniha said the ratio of 60 to 40 was important to ensure that the nation was not 100 per cent indebted externally, and that it was also easier to raise money domestically.
She said the Federal Government has been borrowing from the external debt market to refinance maturing local debts because of the lower interest rates obtainable from foreign sources.
-
Lagos retains highest foreign debt portfolio – DMO
Lagos State, the commercial nerve-center of Nigeria, has retained its position as the state with the highest foreign debt in the country, with a foreign debt put at 1.45 billion dollars as at June 30.
A document obtained from the Debt Management Office (DMO), on Wednesday in Abuja, titled: ‘States, Federal Capital Territory (FCT) and Federal Governments’ External Debt Stock as at June 30, 2018,’ also detailed other states’ external debts.
The document also stated that the external debt stock of the entire nation stood at 22 billion dollars with the Federal Government incurring 17.8 billion dollars, while the states and the FCT owed 4.28 billion dollars.
This means that the Federal Government accounts for 81 per cent of the country’s external debt, while the states and the FCT account for 19 per cent.
The News Agency of Nigeria (NAN) reports that as at Dec. 31, 2017, Lagos State also had the highest foreign debt portfolio 1.47 billion dollars, but the figure reduced to 1.45 billion dollars by June 30.
Following Lagos in a distant second is Edo, which incurred 279 million dollars.Others are Kaduna, 232.9 million dollars; Cross River, 193.7 million dollars; Bauchi, 134.9 million dollars and Enugu, 127.9 million dollars.
According to the DMO, other top debtors are Anambra owing 107.4 million dollars; Oyo, 106.34 million dollars; Ogun, 105.3 million dollars; Osun, 101.5 million dollars and Abia with 100.2 million dollars.
Following closely are Ekiti with 97.9 million dollars; Ondo with 81.4 million dollars; Rivers, 79.5 million dollars; Ebonyi, 67.9 million dollars; Kano, 65 million dollars; Katsina, 64.7 million dollar and Delta, 63.8 million dollars.
The statement also revealed that Imo incurred 61.2 million dollars; Nassarawa, 61.4 million dollars; Adamawa, 57.8 million dollars; Niger, 55.7 million dollars; and Bayelsa with 57.2 million dollars.
Others are Akwa Ibom with 48.3 million dollars; Kebbi, 46.7 million dollars; Kwara, 49.8 million dollars and Sokoto with 40.2 million dollars.
States with the lowest debt portfolio include Taraba, with 22.1 million dollars; Borno, 22.2 million dollars; Yobe, with 28.4 million dollars and Plateau with 29.6 million dollars.
Others are Kogi, with 32.37 million dollars; Jigawa, 32.80 million dollars; FCT, 32.83 million dollars; Zamfara, 34.2 million dollars; Benue, 34.7 million dollars and Gombe, 38.5 million dollars.
NAN reports that the Director-General of DMO, Ms Patience Oniha, had at a media conference on Aug. 14, said as at June 30, the nation’s public debt stock increased marginally by 3.01 per cent from that of Dec. 2017.
“One of the beneficial outcomes is the rebalancing of the debt stock, the ratio of domestic debt to external debt inching towards the target of 60:40 and the target of 75:25 between long term domestic debt and short term domestic debt.
According to the figures for June 30 released by the DMO, the ratio between domestic and external debt stood at 70 to 30 compared to 73 to 27 in Dec. 2017.
Oniha said the ratio of 60 to 40 was important to ensure that the nation was not 100 per cent indebted externally, and that it was also easier to raise money domestically.
Oniha also said the Federal Government had been borrowing from the external debt market to refinance maturing local debts because of the lower interest rates obtainable from foreign sources.
NAN
-
Nigeria’s total Public Debt hits N22.38tr – DMO
The Debt Management Office (DMO) on Tuesday, disclosed that as at June 30, 2018, the nation’s Public Debt comprises Domestic and External Debt Stock of the Federal and 36 State Governments and the Federal Capital Territory, stood at N22.38 trillion or $73.21 billion.
Addressing newsmen in Abuja, the debt office explained that this figure was a marginal increase of 3.01 percent over the Public Debt Stock for December 2017.
It said the increase in the Public Debt Stock over the 6 months period was due largely to the $2.5 billion Eurobond issued in February 2018.
However, it emphasised that when compared with the Debt Data for March 2018, the Public Debt Stock actually decreased by 1.44 percent from N22.707 trillion in March 2018 to N22.38 trillion in June 2018.
The DMO pointed out that the decrease was due to a 3.38 percent decline in the FGN’s Domestic Debt Stock between March and June 2018.
There were however marginal increases of 0.07 percent in the External Debt Stock and 2.75 percent in the Domestic Debt of States.
A major highlight in the Public Debt Data was the consistent decrease in the FGN’s Domestic Debt which declined from N12.589 trillion in December 2017 to N12.577 trillion in March 2017 and N12.151 trillion in June 2018.
According to the DMO, this reduction in the FGN’s Domestic Debt Stock arose from the redemption of N198 billion Nigerian Treasury Bills in December 2017 and another N639 billion between January and June 2018.
It will be recalled that a total of $3 billion was raised through Eurobonds to refinance maturing domestic debt as part of the implementation of the debt management strategy for the purpose of substituting high cost Domestic Debt with lower cost external debt to reduce Debt Service Costs for the government.
It should be noted that the implementation of the Public Debt Management Strategy whose overall objective is to ensure that Nigeria’s debt is sustainable, is already yielding positive results. One of the beneficial outcomes is the rebalancing of the Debt Stock; the Ratio of Domestic Debt to External Debt inching towards the target of 60:40 and the target of 75:25 between Long Term Domestic Debt and Short Term Domestic Debt.
According to the figures for June 30, 2018 released by the DMO, the Ratio between Domestic and External Debt stood at 70:30 compared to 73:27 in December 2017.
Similarly, the Ratio between Long Term Domestic Debt to Short Term Domestic Debt was 76:24 in June 2018 compared to 72:28 in December 2017.
Thus, the DMO’s activities have resulted in lower interest rates for the Benchmark FGN Securities from about 18.5 percent in January 2017 to 11-14 percent in the first half of 2018.
Also, with the redemption of about N840 billion of Nigerian Treasury Bills more funds were available for lending by banks to the private sector. External capital raising activities also contributed to the increase in external reserves.
-
FG to auction N70bn bonds May 23
The Federal Government has offered for subscription by auction N70 billion worth of bonds in its May 23 auction, the Debt Management Office (DMO) said.
The offer circular obtained from its website on Tuesday in Abuja, stated that it would sell N20 billion of a five-year re-opening issue maturing in April 2023 at 12.75 per cent.
It would also sell N20 billion seven-year re-opening bond to mature in March 2025 at 13.53 per cent and another N30 billion 10-year re-opening bond at 13.98 per cent to mature in Feb. 2028.
Nigeria issues sovereign bonds monthly to support the local bond market, create a benchmark for corporate issuance and fund its budget deficit.
NAN
-
FG makes N64.06bn from bonds in March 21 auctions – DMO
The Federal Government allotted N64.06 billion bonds in its March auction, as against the N70 billion earlier planned, the Debt Management Office (DMO) said.
The result of the auction obtained from the DMO website on Thursday in Abuja, showed that the debt office sold N10.05 billion in five-year bonds at 13.40 per cent, and N45.10 billion in 10-year bonds at 13.60 per cent.
It, however, introduced a new seven-year bond at 13.53 per cent and raised N8.91 billion for it.
The result also said the July 2021 bonds were originally set at 14.50 per cent, March 2025 at 13.53 per cent and Feb. 2028 at 13.98 per cent.
It also said out of the 153 bids, only 64 were successful, adding that the auction drew subscriptions of N142.81 billion.
Nigeria issues sovereign bonds monthly to support the local bond market, create a benchmark for corporate issuance and fund its budget deficit.
-
FG reduces exposure in domestic borrowing – DMO
The Debt Management Office (DMO) says the Federal Government is reducing its exposure in the domestic market to pave way for borrowings by corporate entities.
Ms Patience Oniha, the DMO’s Director-General, told newsmen in Lagos that government had reduced its exposure in the bond market for corporate entities to raise funds.
“We are reducing the amount we borrowed in the domestic so that there will be space for corporate bodies,’’ the director-general said.
She said apart from the government decision to reduce domestic borrowing, the Securities and Exchange Commission ( SEC ) and the Nigerian Stock Exchange ( NSE ) had issued new guidelines and reduced fees for people to borrow.
Oniha said that apart from issues of infrastructure for trading in fixed income securities, the market regulators had done a lot of groundwork to make the market attractive.
She said DMO was a friend with all regulators, noting that they work in teams and groups to get to “where we are today’’.
“We want to see varieties of products to be traded in the market apart from government bonds for people to have more varieties of products to trade on.
“We are expecting development in the market; we want to see corporate bodies to raise bonds in the market for people to have more products to buy apart from the government bonds,’’ Oniha said.
The director-general said that borrowing from the bond market would make books of corporate entities to be balanced instead of concentrating on banks’ loans.
She said that the fixed income market had grown when compared with what we had 10 years ago.
Oniha said that government expected the fixed income market to develop significantly long time ago.
The director-general had recently said the Federal Government would focus more on external borrowings to reduce debt servicing.
She said that in order to go forward the debt office would concentrate more on external borrowings at cheaper rates.
Oniha said that government had decided to borrow more externally to repay Treasury Bills ( TBs ) that mature every now and then.
“Going forward as we do more borrowing based on the Appropriation Act, what can we do to make sure that debt servicing at least, if it does not come down, remains manageable.
“We have decided to do more of external borrowings at cheaper rates,’’ Oniha said.
NAN
-
Fayose borrowed N56bn since 2014 – DMO
…Says N25bn still pending approval in 2017
The Debt Management Office (DMO) over the weekend released the debt profile of Ekiti State State Government under the leadership of Governor Ayodele Fayose.
According to DMO, Fayose has borrowed a total sum of N56 billion since coming to power on October 16, 2014.
In its latest bulletin released at the weekend, the DMO disclosed that the Fayose administration still had a fresh application of N25 billion in 2017 awaiting consideration.
The publication did not state how the funds were expended but they were believed to have been channeled to capital projects and payment of arrears of workers’ salaries.
Some of the capital projects being executed by the Fayose government include the Ado-Ekiti overhead bridge, new Governor’s Office, new High Court complex, among others.
The DMO disclosed the sources of fresh debts incurred by the Fayose regime to include summary of new loans, foreign loans and local bank loans.
The publication which is also available on the DMO website gave a breakdown of loan transactions between October 16, 2014 and December
2016.This excludes the N25 billion request for 2017 which was yet to be granted.
According to the document, the Fayose government renegotiated all outstanding loans as at December 31, 2014 for 20 years (till 2036) on behalf of Ekiti State in 2015.
For 2015 Ekiti State borrowed loans include new loans of N24, 811, 574, 926.00; foreign loans stood at N2,709,786,898.98 while local bank loans was N22,101,788,065.28.
In 2016, the summary of new loans was N31, 688, 638, 962.30 with foreign loans standing at N2, 705, 737, 050. 37 while local bank loans rose to N28, 982, 901, 911.93.
The summary of total loans in two years, that is, between January 2015 and December 2016 is N56, 500, 213, 924.56.
The summary of foreign loans is N5, 415, 523, 947.35 while summary of total bank loans incurred by the Fayose administration is N51, 084, 689, 977.21.
The report did not state when the N25 billion applied for by the government in 2017 would be accessed.
The issue of indebtedness has elicited allegations and
counter-allegations between the Fayose administration and the immediate past administration led by former Governor Kayode Fayemi.Fayose has consistently accused Fayemi of plunging the state into debt that outlives his administration.
The issue of alleged indebtedness by Fayemi was the major reason why Fayose set up a Judicial Panel of Inquiry to probe the former
administration with the panel submitting its report last week.The governor had first put the debt allegedly incurred by Fayose at N45 billion before later coming out with another figure of N85 billion to be exited in 2036.
But the DMO cleared the air in one of its earlier bulletins and put the debt left by Fayemi at N18 billion.
-
FG to float $2.5bn Eurobond for capital project before year end – DMO
The Debt Management Office (DMO) on Thursday said the Federal Government would float a Eurobond to raise 2.5 billion dollars before the end of 2017.
The DMO Director-General, Patience Oniha, made this known at the 2017 Nigerian Debt Capital Markets Conference and Awards, organised by the FMDQ OTC Securities Exchange in Lagos.
Oniha said that the borrowing would enable the country to bridge the gap in the 2017 budget currently facing liquidity problem to finance some capital projects.
She said that the proposed Eurobond issuance would complement the 1.5 billion dollars raised from the international market in March 2017.
Oniha said the nation’s Treasury Bills portfolio presently stood at N3.7 trillion, adding that DMO planned to refinance it with foreign borrowing to reduce pressure on the domestic market.
She said that Nigeria needed to build stronger and responsive institutions that could support infrastructure agenda of the government.
Oniha said that government had proposed to channel new borrowings into the capital investments instead of consumption.
“The debt ratio is not tangible and adequate components of borrowing, because it is not going into funding others than capital investment,” she said.
“Let us channel new borrowings into capital investment instead of consumption.”
On the N100 billion Sukuk Bond, the director-general said that the Federal Government had identified 25 road projects to be funded with the proceeds.
She said that among the roads listed were Ore-Sagamu Road, Kaduna Bypass, Enugu- Port-Harcourt Road, Kano-Maiduguri and Benin-Lokoja Road, among others.
According to her, government has also decided to finance other trunk A roads which will provide the needed support to accelerate the nation’s developmental goals.
She said that Nigeria should build stronger and responsive institutions that could support infrastructure agenda of the government.
“We need to build the business in terms of products that meet specific needs of investors,” she said.
Oniha said that the acceptance of the offer was an indication of the viability of the instrument as an investment option, as well as a demonstration of utmost faith in the economy.
She also commended the federal government for the policy support that led to the success of the initial offer.
The director-general said that it had been encouraged to introduce new instruments to aid government’s funding.
She said investment experts were optimistic that with the issuance, a new instrument had been introduced to the Nigeria’s capital market.
Oniha said that the new instrument would add to the variety of products available for domestic issuers and investors.
Investors in the offer, which closed on September 22, with a seven-year tenor, included pension funds, banks, fund managers and retail investors.
TheNewsGuru.com reports that the N100 billion Sukuk Bond issued by the federal government was oversubscribed by about N6 billion.
The seven-year Sukuk attracted a subscription of N105.88 billion according to the DMO.
-
Federal Government MDAs’ owing N178bn outstanding loans – DMO
The Debt Management Office, DMO, has put the debts of ministries, departments and agencies, MDAs of the Federal Government at N178.09bn.
In a report titled: ‘Federal Government On-Lent Loans to MDAs,’ the DMO disclosed that it raised the funds which were lent to various MDAs to carry out specific assignments in order to boost economic activities in the country.
According to the DMO, the benefiting MDAs executed Memoranda of Understanding before the funds were advanced to them to underscore the fact that they were supposed to return the funds to the coffers of the government.
As of December 31, 2016, the report said the MDAs had a total of N178.09bn to return to the coffers of government, out of a total of N220.62bn that were advanced to them.
The report said, “As part of activities to stimulate growth in the real sectors of the economy towards job creation and poverty reduction, the Federal Government of Nigeria from time to time had through the DMO provided loans to various MDAs to fund development of infrastructure and special projects in key sectors of the economy.
“The projects are road, railway, agriculture, education, cotton, garment and textile, as well as other projects in the key sectors of the economy. Each of the on-lent loans to the MDAs was backed by a Memorandum of Understanding executed between the DMO and the MDAs concerned so as to ensure timely and full repayment of the loans.
“The total outstanding on-lent loans to various MDAs amounted to N178.09bn as of end-December, 2016. The loans were extended to the MDAs to fund the development of infrastructure and special projects in the key sectors of the economy.”