The Debt Management Office (DMO), says that with the redemption of about N840 billion of Nigerian Treasury Bills (NTBs), more funds are now available for lending by the banks to the private sector.
The Director-General of DMO, Ms Patience Oniha, said this during a media conference on Tuesday in Abuja.
She also said that the activities of the organisation had resulted in lower interest rates for the benchmark of Federal Government securities from 18.5 per cent in Jan. 2017 to between 11 and 14 per cent in the first half of 2018.
Oniha said that as at June 30, the nation’s public debt stock stood at N22.38 trillion, a marginal increase of 3.01 per cent from that of Dec. 2017.
According to her, the figure represents total public debt incurred by the Federal Government, the 36 states and the Federal Capital Territory (FCT).
Oniha explained that the increase in the public debt stock over the six months period was largely due to the 2.5 billion dollars Eurobond issued in Feb. 2018.
“When compared to the debt data for March 2018, the public debt stock actually decreased by 1.44 per cent from N22.7 trillion in March 2018 to N22.38 trillion in June 2018.
“The decrease was due to a 3.38 per cent decline in the Federal Government’s domestic debt stock between March and June 2018.
“There were, however, marginal increases of 0.07 per cent in the external debt stock and 2.75 per cent in the domestic debt of states.’’
Oniha said that a major highlight in the public debt data was the consistent decrease in the Federal Government’s domestic debt which declined from N12.58 trillion in Dec. 2017, to N12.57 trillion in March 2017 and N12.15 trillion in June 2018.
According to her, this reduction arose from the redemption of N198 billion NTBs in Dec. 2017 and another N639 billion between Jan. and June 2018.
She recalled that a total of three billion dollars was raised through Eurobonds to refinance maturing domestic debt as part of the implementation of the debt management strategy.
This, she said was for the purpose of substituting high cost of domestic debt with lower cost external debt to reduce debt service costs for the government.
The D-G said that the nation had a debt management strategy contrary to speculations in some quarters that there was none, adding that the overall objective of the strategy was to ensure that Nigeria’s debt was sustainable.
She said that was 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 released by the DMO, the ratio between domestic and external debt stood at 70to 30 compared to 73 to 27 in Dec. 2017.
“Similarly, the ratio between long term domestic debt to short term domestic debt was 76 to 24 in June 2018 compared to 72 to 28 in Dec. 2017.’’
She said that the ratio 60 to 40 was important to ensure that the nation was not 100 per cent indebted externally, adding that it was also easier to raise money domestically.
Oniha also said that the nation’s debt was not excessive as borrowing goes through an executive and legislative process before approval and implementation.
She, however, said that borrowing should not be the only way to fund the nation’s budget deficit, adding that there was room for more revenue generation if all citizens paid taxes and proper remittances were made to government coffers.
She also said that shoring up more revenue would support debt sustainability.
Oniha also said that engaging in Public Private Partnerships (PPP) at both states and federal levels was a sure way of minimising borrowing.
The News Agency of Nigeria (NAN), reports that DMO is the government’s agency saddled with the responsibility of centrally coordinating the management of the nation’s debt.