Federation’s debt increased by $20bn since 2015 ― DMO

Debt Management Office (DMO) said on Monday that Nigeria’s total public debt increased by $20.0 billion between July 2015 and June 30, 2019.

“The total public debt stock as at June 30, 2015, (shortly after the current administration came into office), was USD63.81 billion, and not USD7.0 billion.”

DMO in a statement through which it reacted to recent media reports alleging that All Progressives Congress (APC) government inherited a debt stock of less than USD7 billion in 2015 that has now increased to USD84 billion.

“Nominal increase in the public debt stock between June 30, 2015 (USD63.81 billion) and June 30, 2019 (USD83.88 billion), was about USD20.0 billion, which is a far cry from the gross misrepresentation made at the live programme that the public debt stock increased by USD77.0 billion during this period.

“The public debt stock data published by the DMO comprises a debt of the Federal Government of Nigeria (FGN), the 36 States of the Federation and the Federal Capital Territory (FCT).

“It is, therefore, erroneous to attribute the growth in the Public Debt Stock to borrowings by the FGN only.”

It noted that while the public debt stock has increased, the increase is well guided by the objectives of the Economic Recovery and Growth Plan (ERGP) and the Medium-Term Debt Management Strategy, 2016 – 2019.

“New borrowing was included as one of the strategies in the ERGP to be deployed in the near term, to stimulate economic growth and job creation.

ALSO READ: Ganduje fires back at Kano elders, says you cannot change my decision on new Emirates

“With the deployment of more funds into capital projects, the borrowings contributed to job creation and the recovery from the economic recession in June 2017.”

DMO explained that introduction of project-tied financing products such as Sukuk and Green Bonds in the second half of 2017 was part of the New Borrowing also supported infrastructural development.

“By international benchmarks, Nigeria’s total public debt relative to the GDP is sustainable at 18.99 per cent of GDP as at June 30, 2019.

“However, the government recognises that the ratio of its debt service to revenue is rather high, a situation that is directly attributable to Nigeria’s low revenues.

“This is clearly evident from the tax to GDP ratio of 6 per cent in 2018.”

The agency also explained the $22.718 billion Medium-Term External Borrowing Plan, 2016 – 2018, which is outstanding from the USD29.96 billion previously submitted by the National Assembly.

“It said the loans come with cheaper financing terms namely: low-interest rates, longer tenors and ample grace periods.

“It is instructive to note that the proposed External Borrowing Plan, also includes the external funding needs of the states and FCT.”