Nigeria Excharge News

Nigeria Exchange News – Nigeria sinks deeper into external debt

Nigeria Excharge NewsNigeria Exchange News – Nigeria’s total debt stock has again risen to a very high level of N10.4 trillion as at June 2014.

The rising debt profile of the country is made up of external debt stock of N1.46 trillion ($9.377 billion), Federal Government domestic debt of N7.421 trillion ($47.653billion).

States in the federation have a domestic debt stock of N1.551 trillion or $9.963 billion. The Federal Government’s share of the rising external debt stands at $6.363 billion.

As at December 2013, however, the total stock of external debt was $8.821 billion indicating a rise of $556 million in the first half of 2014. But as at December 31, 2012 Federal Government’s external debt was $4.14 billion as against a total debt stock of both Federal and state governments of $6.5 billion.

A break-down of the rising debt profile showed that Federal Government’s external and domestic debts amounted to N8.8 trillion or $57.030 billion as at the end of June 2014. Federal Government borrowing from multilateral Institutions amounted to $3.826 billion while loans from bilateral sources mainly China Exim Bank and Eurobond amounted to $2.537 billion.

In the case of states, a total of $2.904 billion was sourced from multilateral institutions, $108.9 million was obtained as loans from bilateral sources, thus making the states’ total outstanding external debt as at June 2013 $3.013 billion.

Disclosing these facts in Abuja, Director General, Debt Management Office, Dr. Abraham Nwankwo said that although the debt profile had increased, he assured that the debt remained sustainable at a ratio of 12.51 to the Gross Domestic Product, GDP.

The D-G also said that the managers of the nation’s debt would apply more caution in further borrowings in order not to run into the crisis of debt overhang, which the nation once suffered.

His words: “The sovereign debt is doing well. Currently our total sovereign domestic debt for both Federal and states and the FCT is about N8.9 trillion and external debt is about $9.38 billion.

“Our current debt/GDP ratio is about 12.51 per cent which is much lower than the 56 per cent total public to GDP for countries of Nigeria’s group.

However, this is not an indication that Nigeria can afford to borrow without caution. In spite of the re-basing which means we have more capacity to borrow, we are not going to borrow without caution. In fact, we are going to be more cautious, especially because our tax-GDP ratio is low. Many economic agents do not pay their taxes.”

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