Ten years after Nigeria’s historic exit from the Paris Club of Creditors, the country’s external debt balance has climbed to $10.72bn, up from $3.54bn, investigation has shown.
The Federal Government had between 2005 and April 2007 paid over $15bn to exit from both the Paris Club and London Club of Creditors after receiving a write-off of about $18bn from the former.
For the Paris Club, the payment included the first tranche of $6.3bn made in November 2005, the second tranche of $1.387bn made in December 2005, and the third tranche of $4.498bn paid in April 2006, as well as a commission of over $30m paid to the Central Bank of Nigeria.
For the London Club, the payment included Par Bond of $1.486bn paid in December 2006; Promissory Notes of $512m paid in early March 2007; oil warrants of $82m paid on April 4, 2007 and a commission of 0.5 per cent paid to the CBN.
After the exit from the Paris Club, the country’s external debt came down to $3.54bn as of December 31, 2006, according to statistics obtained from the Debt Management Office.
Over the years, however, the external debt situation of the country had gradually climbed to $10.72bn as of December 31, 2015, according to the DMO.
This means that within the period, 2006 to 2015, the country’s external debt grew by $7.18bn, or 202.4 per cent.
After Nigeria’s exit from the Paris Club, the Federal Government tried to control the expansion of the country’s debt profile by limiting external borrowing to concessionary loans. However, in the last two years, the World Bank has said that the country is capable of borrowing from its commercial lending window.
However, the Federal Government at the same time opened its doors wide to domestic borrowing, which increased within the period after the exit thereby, raising fears that the country could relapse into the debt trap.
Our correspondent reported that the country’s total debt as of December 31, 2015 stood at N12.6tn.
The total debt is made up of the external debt of the federal and state governments and the domestic debts of both.
In terms of segmentation, the external debts of both tiers of government rose from $9.71bn as of December 31, 2014 to $10.71bn as of December 31, 2015. This shows a rise of $1bn or growth rate of 10.37 per cent within the one-year period.
The domestic debt of the Federal Government, which is the biggest component of the total debt, rose from N7.9tn as of December 31, 2014 to N8.84tn ayear later.
This shows that the domestic debt of the Federal Government rose by N932.97bn or 11.8 per cent within the one-year period.
The 36 states of the federation and the Federal Capital Territory held $3,369,911,154.54 of the country’s external debt component, while the Federal Government’s external commitment stood at $7,348,520,340.26.
For 2016, the Federal Government expects to borrow N984bn from domestic sources and N900bn from foreign sources to finance the capital component of the budget.
It also set aside the sum of N113bn as a sinking fund towards the retirement of maturing loans; while N1.36tn was provided for foreign and domestic debt service obligations.
Our correspondent also reported that the Federal Government spent a total of N2.95tn to service domestic debts for a period of five years from 2010 to 2014.