Debt servicing up 8.75% YoY
By Jeph Ajobaju, Chief Copy Editor
Debt servicing cost Nigeria N977.03 billion in half year ended June 2021 (H1 2021), an 8.75 per cent rise year-on-year against N898.39 billion in H1 2020, according to the latest report of the Central Bank of Nigeria (CBN).
Domestic debt grew compared with H1 2020 and so hiked the cost of debt service to 8.7 per cent on the back of loans taken by Abuja to bridge revenue shortfall.
Lawmakers two weeks ago approved for President Muhammadu Buhari to obtain new loans worth $5.8 billion plus a $10 million grant from Germany, on top of the $92.626 billion debt Nigeria already racked up by Q3 2021.
Nigeria’s debt rose to N38.005 trillion or $92.626 billion in Q3 2021, latest Debt Management Office (DMO) data shows.
The sum includes total external and domestic debts of the federal and 36 state governments as well as the Federal Capital Territory (FCT).
Nigeria spent N1.8 trillion on debt servicing in the first five months of this year, 98 per cent of revenue, as total loans rose to $87.24 billion in Q1 2021 from $86.39 billion in Q4 2020.
Under Buhari, Nigeria’s debt jumped by N20.8 trillion to N32.92 trillion between June 2015 and December 2020, and to N33.11 trillion in Q1 2021, all figures released by the DMO.
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Federal domestic debt
Domestic debt owed by the federal government amounted to N17,631.80 billion in H1 2021, an increase of N2,176.10 billion or 14.08 per cent above N15,455.70 billion in H1 2020.
FGN Bonds worth N900.00 billion were offered. Public subscription was N1,726.40 billion and sale N1,415.00 billion. The amount offered comprised new issues and re-openings of FGN Bonds.
In H1 2020, FGN Bonds issue amounted to N615.00 billion, subscription (N2,449.97 billion), and allotment (N1,308.58 billion).
The increase in offer and allotment in H1 2021 was attributable to the government’s drive to fund fiscal deficit from the domestic market, says the CBN report, as published by Nairametrics.
Total value of FGN Bonds outstanding in H1 2021 was N13,659.66 billion, compared with N11,673.84 billion in H1 2020, an increase of N1,985.83 billion or 17.01 per cent.
The holding structure of the instrument is
- Deposit Money Banks – N1.25 trillion or 75.31 per cent
- Mandate and internal funds customers, including CBN branches – N411.22 billion or 24.69 per cent.
Debt owed by states
Lagos makes N45 billion in internally generated revenue (IGR) per month, more than those of 31 states combined, but also owes the greatest amount of N532.12 billion, or 12 times its monthly earnings.
Domestic debt owed by state governments and the FCT rose to N4.2 trillion in Q3 2021 from N4.12 trillion in Q2 2021.
Lagos, Rivers, and Akwa Ibom are the three most indebted, according to latest data from the DMO.
The N4.2 trillion debt owed by the 36 states and the FCT is 23.04 per cent of the country’s domestic debt of N18.23 trillion in Q3 2021, down from N21.75 trillion in Q2 2021.
Lagos, Ogun, and three oil-producing states – Rivers, Akwa Ibom, and Delta – are the top five debtors, with a combined domestic stock of about N1.39 trillion.