– The federal government has been advised not to borrow above $22.08 billion in 2017
– The Debt Management Office (DMO) gave the recommendation in its 2016 Debt Sustainability Analysis (DSA) report
– DMO emphasised that the recommendation was made, taking into account the absorptive capacity of the domestic debt market
The federal government has been advised by the Debt Management Office (DMO) not to borrow above $22.08 billion in 2017.
On Tuesday, October 25, DMO gave the recommendation in its 2016 Debt Sustainability Analysis (DSA) report, obtained by the News Agency of Nigeria (NAN).
In the report, DMO stated that the end-period on Net Present Value (NPV) of the Total Public Debt-to-GDP ratio for 2016 for the federal government was projected at 13.5%.
It explained that the development supported the use of more external finance for funding capital projects, noting that the policy was in line with the focus of the present administration on speeding up infrastructure development in the country.
The DMO stated that it would achieve this by substituting the relatively expensive domestic borrowing in favour of cheaper external financing.
It also emphasised that the recommendation was made, taking into account the absorptive capacity of the domestic debt market and the options available in the external market.
Nigeria’s total debt portfolio rose 30% to $62 billion in 2014, up from $47.6 billion as at September 2013.
The country’s external debt stood at $9.52 billion, 15% of the entire debt stock.
Domestic borrowing, however, accounted for bulk of the total money owed by Africa’s largest economy.
Prior to the 2005 debt relief, bad debt management practices led to the payment of $4.9 billion yearly on debt servicing.
Meanwhile, Nigeria’s President Muhammadu Buhari has written to the National Assembly seeking adjustments to some line items in the 2016 budget to address financial urgencies.
According to a report by Premium Times, Buhari is seeking a total of N180.8 billion in virement for line items in both capital and recurrent expenditures following renewed militant activities in the Niger-Delta.
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