Nigeria’s Total Debt Now $26bn

Nigeria’s total debt stock amounted to $26 billion (about N3.812 trillion) as at the end of 2009.
The data, which was made available yesterday by the Debt Management Office represents the stock of $3.9billion in external debt and N3.23 trillion ($21.79 billion) owed local contractors and creditors. The local debt represents 84.7 percent of the total debt stock pile of the country.

Although some analysts argue that the figure, particularly the external debt component is discomforting compared to the country’s external debt position in 2005 following the debt write off from the Paris club of creditor nations, the director general of the DMO, Mr Abraham Nwankwo, insisted the government has been conservative in its borrowing.

DMO’s disclosure coincided with the release of N329.706 billion to the three tiers of government from the federation account for the month of January this year, a decline of N40 billion from the N370.312 billion shared by the federal, states and local governments in December, 2009.

The federal government had in 2005 secured the approval of the Paris Club under a debt-relief deal that eliminated $18 billion of debt in exchange for $12 billion in payments to foreign creditors.

That was a total package worth $30 billion of Nigeria's total external debt of $35 billion at the time.
The DMO boss said at a forum with journalists yesterday in Lagos that public debt is incurred for developmental purposes.
He said however that since 2003 the domestic bond market has been playing an increasing role in supporting government’s funding needs for development and also in plugging deficits in the national budget.

Nwankwo stated that in the current year, the DMO will effectively fund the component of the deficit in the 2010 budget that is assigned to FGN bonds amounting to over N800 billion.
He also disclosed that the DMO will this year issue the $500 million Nigerian sovereign bond planned for the international capital market.

The $500 million 10 year instrument was initially planned for last year but was aborted due to the global economic meltdown and weakened investor confidence in the international market.
The director, Market Development, DMO, Mrs Patience Oniha, added: “There is demand already for the Nigerian instrument, so we are going ahead with it this year.”
She said: “Ghana and Gabon have already issued theirs while Senegal that has a lower sovereign rating than Nigeria floated theirs in 2009.”

The other major task facing the DMO this year, Nwankwo said is the sustenance of activities to help the 36 states of the federation fully implement the template for the establishment of debt management departments in their respective states.
Nwankwo explained that the federal government has through the issuance of sovereign bonds financed the N200 billion commercial agriculture project; the Nigerian cotton textile and garment scheme; the revitalisation of railway transportation through the purchase of locomotives; and the development of new districts as well as access roads and infrastructure in Abuja.
In a related development, total revenue allocations that accrued to the three tiers of government slumped by N40.606 or 10.96 percent to N329.706 billion in January this year from N370.312 billion in December, 2009.

Also the subsidy on petroleum products deducted by the Nigeria National Petroleum Corporation from the N426.476 billion in total revenues realised in January fell to N23.230 billion in comparison to the N35 billion deducted from N341.480 billion realised in December last year.

Statutory allocations distributable to the three tiers however increased from N235.670 billion from December 2009 to N283.532 billion in January this year, representing an increase of 51.114 percent.

A communiqué issued by the Technical Sub-committee of FAAC and signed by the Accountant General of the Federation, Mr. Ibrahim Hassan Dankwambo, explained that the increase in statutory allocation was attributable to receipts by the Nigeria National Petroleum Corporation arising from NLNG feedstock price adjustment.”

FAAC also pointed out that total revenue was lower because the augmentation and exchange rate difference was not distributed for this month as 2010 was yet to be approved.