Federal treasury overshoots targets set in NDP 2021-2025
By Jeph Ajobaju, Chief Copy Editor
Nigeria’s domestic debt leapt 20.8 per cent in the first quarter of 2022 (Q1 2022) and foreign debt 21.6 per cent versus Q1 2021, with local loans overshooting the targets in the National Development Plan (NDP) 2021-2025.
The 2021-2025 NDP stipulates that the federal government shall reduce its domestic borrowing and focus more on foreign sources to create room for the private sector in the money market.
Domestic debt was N20.114 trillion in Q1 2022 against N16.513 trillion Q1 2021, and foreign debt $39.969 billion compared with $32.859 billion in Q1 2021.
The FGN bond portion grew 14.2 per cent to N14.240 trillion in Q1 2022, above N12.465 trillion in Q1 2021.
“It is in the interest of the economy to have more private sector businesses raise corporate bond and list their securities on securities exchanges in Nigeria, either to be admitted on an OTC Exchange or listed on a regular exchange, as against FGN bond dominating the scene,” said Tajudeen Olayinka, an investment banker and stockbroker.
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Essence of 2021-2025 NDP
“The essence of the 2021-2025 NDP is defeated as government has continued to borrow more in the domestic market,´ Olayinka added, per Vanguard.
“More listing by private sector is an indication of businesses having more access to long term capital.
“It is good to have it this way, because private sector capital formation tends to drive economy more towards attaining full employment output, at a lower level of inflation.
“But the level of private sector capital raising in Nigeria is still not encouraging, especially if one reflects on the level of capital raising in our market before the global meltdown of 2008/2009.”
Debt servicing cost N896b in Q1 2022
Nigeria spent N896.7 billion to service both domestic and foreign debt in Q1 2022, a 12 per cent year-on-year (YoY) decline from N1.02 trillion Q1 2021, according to the report of the Debt Management Office (DMO).
The DMO said N668.7 billion was spent on domestic debt servicing, a 9.0 per cent YoY rise above N612.7 billion on Q1 2021.
Up to N228 billion ($548.78 million) was spent on servicing external debt, a 44 per cent decline on N410.1 billion in Q1 2021.
Total public debt increased 5.2 per cent to N41.6 trillion in Q1 2022 from N39.56 trillion Q4 2021. External debt accounted for N41.6 trillion and domestic debt N4.8 trillion, the DMO said.
