Bankers in the country have expressed worries over the unabated rise in the Federal Government’s debt profile.
This was part of the submission of members at the recent Monetary Policy Committee meeting of the Central Bank of Nigeria.
Part of the observations submitted read, “The huge concerns expressed in the last MPC meeting about the increases in total public debt remain unabated.
“Based on the bond issuance calendar of the Debt Management Office, there were three additional FGN bond auctions in July, August and September to raise money to part-finance the 2019 Federal Budget while additional issuance of Eurobond is expected in the late part of 2019 or early 2020.
“As the threat of debt vulnerability continues, a coordinated domestic revenue expansion with simultaneous fiscal prudence as suggested in the last MPC meeting still remain the key to addressing the weak fiscal position of the economy.”
The Federal Government’s domestic debt outstanding rose by N1.26tn to N13.41tn as of June 2019, over the figure for the corresponding period of 2018.
This was disclosed in the CBN’s half year report on Federal Government’s domestic debt.
Part of the report read, “The total domestic debt outstanding at the end of June 2019 stood at N13.41tn, representing an increase of N1.26tn or 10.38 per cent, over N12.15tn in the corresponding period of 2018.”
It explained that the debt stock during the review period comprised the Federal Government of Nigeria’s bonds worth N9.69tn or 72.26 per cent, Nigerian Treasury Bills worth N2.65tn or 19.77 per cent and FRN Treasury Bonds of N125.99bn or 0.94 per cent.
Others included FGN promissory notes of N707.76bn or 5.28 per cent, FGN Sukuk worth N200bn or 1.49 per cent, FGN green bonds worth N25.69bn or 0.19 per cent and FGN savings bonds of N10.43bn or 0.08 per cent.
In spite of higher debt stock, the cost of debt servicing declined by 15.00 per cent to N800.73bn at end-June 2019, compared to N941.99bn in the corresponding period of 2018.
The Federal Government disclosed recently that N2.45tn was allocated for debt servicing, in its 2020 Appropriation Bill.
Commenting on the allocation, the President, Chartered Institute of Bankers of Nigeria, Dr. Uche Olowu, had said, “That is a warning signal, and I hope those debts have been judiciously used because we are serving debt. If the expected impact outcome is not achieved, then we are back to status quo.”
A former President, Association of National Accountants of Nigeria, Dr Sam Nzekwe, said, “Amount for debt servicing is disturbing because when you spend about a quarter on debt servicing, the government must think twice, especially when you are funding the budget through loan. We need to see how to increase investment in capital project.”