The Debt Management Office, DMO, has advised
the Federal Government not to borrow above $22.08
billion in 2017.
the Federal Government not to borrow above $22.08
billion in 2017.
The DMO gave the recommendation on Tuesday in
its 2016 Debt Sustainability Analysis (DSA) report,
obtained by the News Agency of Nigeria in Lagos.
In the report, DMO stated that the end-period on
Net Present Value (NPV) of the Total Public Debt-
to-GDP ratio for 2016 for the Federal Government
was projected at 13.5 per cent.
”The maximum amount that can be borrowed
(domestic and external) by the Federal Government
of Nigeria in 2017, without violating the country-
specific threshold, will be 22.08 billion dollars (i.e.
5.89 per cent of 374.95 billion dollars).
”The Debt Management Strategy, 2016-2019
provides for the rebalancing of the debt portfolio
from its composition of 84:16 as at the end of
December, 2015 to an optimal composition of
60:40 by the end of December, 2019 for domestic
to external debts, respectively.
It explained that the development supported the use
of more external finance for funding capital
projects, noting that the policy was in line with the
focus of the present administration on speeding up
infrastructure development in the country.
The DMO stated that it would achieve this by
substituting the relatively expensive domestic
borrowing in favour of cheaper external financing.
”This policy stance has been reinforced by the
recent deterioration in macroeconomic variables,
particularly with respect to the rising cost of
domestic borrowing.
”Hence, the shift of emphasis to external borrowing
would help to reduce debt service burden in the
short to medium-term and further create more
borrowing space for the private sector in the
domestic market.
”Accordingly, for the fiscal year 2017, the maximum
amount that can be borrowed is 22.08 billion U.S.
dollars and it is proposed to be obtained from both
the domestic and external sources as follows:
”New Domestic Borrowing 5.52 billion U.S. dollars
(equivalent of about N1.6 billion) and New External
Borrowing: 16.56 billion U.S dollars (equivalent of
about N4.8 billion).”
The DMO also emphasised that the
recommendation was made, taking into account the
absorptive capacity of the domestic debt market
and the options available in the external market.
Nigeria’s total debt portfolio rose 30 per cent to
$62 billion in 2014, up from $47.6 billion as at
September 2013.
The country’s external debt stood at $9.52 billion,
15 per cent of the entire debt stock.
Domestic borrowing, however, accounted for bulk of
the total money owed by Africa’s largest economy.
Prior to the 2005 debt relief, bad debt management
practices led to the payment of $4.9 billion yearly
on debt servicing.
No comments:
Post a Comment