As of March 31, 2015, the country’s total debt stood at N12.06tn. This means the debt level increased by N7.1tn in two years.
Segmenting the national debt, the DMO put the Federal Government’s domestic debt at N11.97tn. Two years ago, as of March 31, 2015, this component of the debt burden stood at N8.51tn.
This means that within a period of two years, the Federal Government has borrowed a total of N3.46tn from domestic creditors. This shows that the domestic debt of the Federal Government has increased by 40.71 per cent.
In the same period, the country’s external debt (for the federal and state governments) rose from $9.46bn to $13.81bn. This means that within the two-year period, the country’s external debt rose by $4.35bn or 45.98 per cent.
The external debt component, however, has been affected by exchange rate variations as the last two years have witnessed noticeable changes in foreign exchange rates.
According to the DMO, the official exchange rate of N306.35 to $1 was used in calculating the country’s external debt for March 31, 2017, while the official rate of N197 to $1 was used in determining the foreign debt for March 31, 2015.
The domestic debt component of the states stood at N2.96tn as of March 31, 2017, up from the figure of N1.69bn at the same time in 2015.
This means that within the period of two years, the domestic debt of the states rose by N1.27tn or 75.15 per cent.
Amidst drying revenues from oil and gas, the government has in the last two years increasingly depended on borrowing even to carry out routine responsibilities.
Although foreign debts are accounted as cheaper than domestic debts, the government has increasingly depended on domestic sources of borrowing as foreign donors place more stringent conditions before granting credit facilities to the government.
To raise the required funds from the domestic debt market, the Federal Government has been active in the market with a number of instruments, including FGN Bonds and the Nigeria Treasury Bill. It recently floated a new instrument known as the FGN Savings Bond.
The International Monetary Fund had recently projected that Nigeria’s indebtedness would climb to 24.1 per cent of the nation’s Gross Domestic Product by 2018. It said that the country’s current indebtedness would have reached 23.3 per cent of the GDP by the end of 2017.
The country closed 2016 with a debt to GDP ratio of 18.6 per cent. By the end of 2015, Nigeria’s debt to GDP ratio stood at 12.1 per cent, according to the Bretton Wood institution.