The Debt Management Office (DMO) says Nigeria’s total public debt rose to N87.38 trillion in the second quarter (Q2) of 2023, recording an increase of 75.29 percent.
This represents a N37.53 trillion increase in total public debt, compared to the N49.85 trillion reported at the end of the first quarter (Q1) of the year.
In its latest report, the debt office said the surge was occasioned by the N22.71 trillion ways and means advances obtained by the federal government from the Central Bank of Nigeria (CBN).
“Nigeria’s total public debt stock as at June 30, 2023, was N87.38tn ($113.42bn). It comprises the total domestic and external debts of the Federal Government of Nigeria, the thirty-six states, and the Federal Capital Territory,” DMO said.
The major addition to the Public Debt Stock was the inclusion of the N22.712 Trillion securitized FGN’s Ways and Means Advances.”
The DMO said the federal government received the approval of the national assembly (NASS) to securitise the CBN loan in May 2023.
CBN’s ways and means advances is a loan extended to the federal government for short-term financial emergencies.
The CBN Act stipulated that the loan issued shall not exceed five percent of the previous year’s revenue generated by the federal government.
But it was raised to 15 percent in May after Muhammadu Buhari, the former president of Nigeria, requested securitisation of the loan to reduce the interest paid on the principal and extend its tenor.
The total public debt was at N49.85 trillion in Q1 2023 because the DMO did not include the ways and means loan, which is an accumulation of the federal government’s debt to the CBN.
TOTAL PUBLIC DEBT SURPASSES DMO’s PROJECTION
The debt office said the securitisation of the central bank loan after receipt of requisite approvals, had enabled its inclusion in Nigeria’s total public debt profile.
“This development, which was welcomed by development partners amongst others, has improved debt transparency and led to the reduction in Debt Service costs associated with the Ways and Means Advances” the office said.
DMO said new borrowings by the federal government and the subnationals from local and external sources, also jerked up the total public debt. The increase surpassed the N77 trillion projected earlier in January by Patience Oniha, the director-general of DMO.
Meanwhile, out of the total debt, according to the latest DMO report, the total domestic debt accounted for 61.95 percent or N54.13 trillion and total external debt contributed N33.25 trillion, which represents 38.05 percent.
This is a significant increase compared with Q1 figures, which showed domestic debt was N30.21 trillion and external debt was pegged at N19.64 trillion.
However, the DMO believes that the reforms already introduced by the present administration and those that may emerge from “the recommendations of the Fiscal Reform and Tax Policies Committee, are expected to impact debt strategy and improve debt sustainability”.
The debt office, had in May, urged the federal government to resolve its revenue problem to increase turnover, saying this would reduce the dependence on debt to fund the budget deficit.