Loan Servicing Gulps N5.2tn as Public Debt Rises to N77tn
The Debt Management Office has disclosed that Nigeria’s public debt burden may hit N77tn if the National Assembly approves the request by the President Muhammadu Buhari, to restructure the Ways and Means Advances.
This was revealed by the Director-General of DMO, Patience Oniha during the public presentation of the 2023 budget organized by the Minister of Finance, Budget and National Planning, Dr Zainab Ahmed.
The Ways and Means Advances is a loan facility through which the Central Bank of Nigeria finances the shortfalls in the government’s budget. This is as the Federal Government spent N5.24tn servicing debts in 2022.
Oniha, however, noted that the debt would be N70tn without N5tn new borrowing and N2tn promissory notes.
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She said, “The DMO released the figure for the country’s debt stock as at September, you don’t expect it to be significantly different from December. Secondly, there are a lot of discussions on the Ways and Means. In addition to the significant costs saving in loans service we would get by securitizing it.
“There is an element of transparency in the sense that it is now reflected in the public debt stock. Once it is passed by the National Assembly, it means we will be seeing that figure included in the public debt. You will see a significant increase in public debt to N77tn.”
She said while the debt is growing because there is new borrowing, revenue is receiving significant importance.
“Like DMO always says, you can’t talk about debt without talking about revenue. We need the two to work together,” she added.
The FG’s huge appetite for borrowing under the current regime had worsened the debt position as the country’s debt stock rose to N44.06tn as of September last year.
The DMO and the government had come under attacks from experts and key stakeholders in the economy over the country’s rising debt levels.
Meanwhile, Economic Confidential had reported that, the President Muhammadu Buhari, recently transmitted to the National Assembly, a request for approval of Ways and Means Advances restructuring to the tune of N23.7tn.
At the plenary on December 21, President of the Senate, Ahmad Lawan; and Speaker of the House of Representatives, Femi Gbajabiamila, read out Buhari’s request to members of the respective chambers.
In the request titled ‘Restructuring of Ways and Means Advances,’ the President wrote, “The Ways and Means Advances by the Central Bank of Nigeria to the Federal Government has been a funding option to the Federal Government to cater for short-term or emergency finance to fund delayed government expected cash receipt of fiscal deficit.
“The Ways and Means balances as of 19th December 2022, is N23,719,703,774,306.90. I have approved the securitisation of the Ways and Means balances along the following terms: amount, N23.7tn; tenure, 40 years; moratorium on principal repayment, 3 years; pricing interest rate, 9 per cent. Your concurrence and approval is sought to allow for the implementation of the same.”
However, the Senate denied the request by the President to restructure the N23.7tn Ways and Means advances, noting among various reasons that FG spent N5.24tn servicing debts in 2022.
