By Daniel Edu
The total domestic debt stock has seen a staggering increase of 133.95%, reaching N51.96 trillion by the end of 2023, according to the Director-General of the Debt Management Office, Patience Oniha. In an interview with CNBC Africa during discussions for the establishment of the African Debt Managers Initiative Network, Oniha revealed that the Federal Government had secured N7.04 trillion in new domestic borrowing in 2023.
The surge in domestic debt has been a cause for concern, with the total domestic debt standing at N22.21 trillion at the end of December 2022. The substantial rise is attributed to the inclusion of N22.71 trillion in securitized FGN’s Ways and Means Advances, reflected in domestic borrowings. This shift in debt composition has raised the total domestic borrowings outside of securitized Ways and Means Advances to N25.60 trillion.
Oniha defended the increase, emphasizing that the market had the capacity for the government to raise funds. She highlighted the diverse investor base, including asset managers, fund managers, pension funds, insurance companies, and banks. Despite concerns about the rising debt, Oniha noted that subscription levels remained strong, and interest rates were responsible, demonstrating ample liquidity.
The Director-General acknowledged that the uncertainty caused by the Russia-Ukraine war has made foreign investors more cautious, leading to increased rates in the foreign market. She anticipates the government’s continued presence in the domestic market in 2024.
Addressing the broader fiscal landscape, Oniha emphasized the importance of increasing revenues to reduce the need for borrowing, ultimately lowering the debt-service to revenue ratio. As of the second quarter of 2023, Nigeria’s total public debt reached N87.38 trillion, comprising both domestic and external debts of the federal government, states, and the Federal Capital Territory. Despite the high deficit financing, the Minister of Finance, Wale Edun, urged the country to prioritize generating adequate revenues to fund the 2023 national budget.
