The Federal Government spent a total of
N446.44bn to service the nation’s domestic and
external debts between January and April this
year, figures obtained from the Federal Ministry of
Finance have revealed.
The figures are contained in the Consolidated
Income and Disbursement Account of the Federal
Government for the first four months of this year
prepared by the Office of the Accountant-General
of the Federation.
The N446.44bn, when compared to the
N317.87bn spent for the same purpose in the first
four months of 2015, according to the document,
represents an increase of N128.57bn or 40.4 per
The report, which was exclusively obtained by our
correspondent on Wednesday in Abuja, stated that
the Federal Government spent the sum of
N425.91bn on domestic debt, while the balance of
N20.53bn was used to service the foreign
component of the country’s total debt.
A month-by-month breakdown of the amount
spent on debt servicing showed that the sum of
N11.04bn, made up of N5.77bn for domestic and
N5.27bn foreign, was spent in January; while
February had N234.66bn (N229.58bn for domestic
and N5.08bn for foreign).
In the month of March, the document put the
amount spent on debt servicing at N119.09bn
made up of N114bn for domestic debt and for
N5.08bn foreign debt; while the sum of N81.63bn
was spent in April, with N76.54bn and N5.08bn
allocated for domestic and foreign debt servicing,
In the 2016 budget, the Federal Government had
proposed to spend N1.475tn to service the
According to the budget, a total sum of N1.30tn
is expected to be spent servicing the domestic
component of the nation’s debt, while N53.48bn
is for foreign debts.
In addition, a total sum of N113.44bn was
budgeted as a sinking fund to enable the
government to retire maturing loan obligations.
The 2016 budget has a fiscal deficit of N2.22tn,
representing 2.16 per cent of Nigeria’s Gross
The deficit, according to the government, will be
financed from borrowings of N1.84tn made up of
domestic borrowing of N984bn and foreign
borrowing of N900bn.
This, according to the budget document, is
expected to increase the country’s overall debt
profile to 14 per cent of the GDP.
The Debt Management Office had said refinancing
30 per cent (N2.56tn) of Nigeria’s total domestic
debt of N8.4tn in the next one year posed a high
risk to the economy.
It explained that the main risks to the existing
public debt portfolio were the high refinancing
risk, given that more than 30 per cent of the
domestic debt would mature within one year; and
the high interest rate risk arising from the high
proportion of domestic debt due for re-fixing
within the coming year, and therefore, exposed to
changes in interest rates.
In the country’s debt management strategy
document for 2016-2019, the DMO stated, “The
direct exposure to exchange rate risk is limited
due to the low share of debt denominated in
foreign currencies and low interest rates at
concessional terms that apply to most of the
“Regarding domestic debt, the large amount of
short-term securities in the portfolio implies a
relatively higher exposure to an interest rate
increase and additional high refinancing risk.”
Commenting on Nigeria’s debt strategy, the Head,
Banking and Finance Department, Nasarawa State
University, Keffi, Uche Uwaleke, said the country
was likely to have limited access to concessional
funding, which currently constitutes a larger
proportion of its external debt owing to its
middle- income status.
Uwaleke, an Associate Professor of Finance,
added that the new foreign exchange policy of the
Central Bank of Nigeria, which has left the naira
at the mercy of market forces, would trigger
“The fact that the public debt portfolio is
characterised by a relatively high share of
domestic debt falling due within the next one year
implies a relatively higher exposure to an interest
rate risk since maturing debt will have to be
refinanced at market rates, which could be higher
than interest rates on existing debt,” he said.