Debt Management Office Incoming Administration Inherits N77trn Debt

The incoming administration of the Debt Management Office, DMO, would inherit about N77 trillion as debt before President Muhammadu Buhari’s tenure ends in May.

Patience Oniha, director general disclosed this in Abuja on Wednesday.

Oniha spoke with journalists at the public presentation and breakdown of the highlights of the 2023 Appropriation Act.

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She said:

“There are a lot of discussions on the ways and means. In addition to the significant cost saving in loan service we would get by securitising 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 N77 trillion.

“The other area of the debt stock we are trying to highlight is to say the debt stock is also growing from the issuance of promissory notes, which are not true borrowing as such by the government.”

Earlier on Tuesday, Buhari signed the N21.83 trillion 2023 budget into law, with a debt of N11.34 trillion.

The debt represented 5.03 percent of the country’s gross domestic product (GDP).

Zainab Ahmed, minister of finance, budget, and national planning, had said the federal government would finance the deficit by borrowing.

According to the minister on funding sources for the N11.34 trillion 2023 budget deficit, 22 percent of projected revenues would come from oil-related sources, while 78 percent would be earned from non-oil sources.

To fund the debt, according to Ahmed, N7.04 trillion would be borrowed from domestic sources, N1.76 trillion from foreign sources, N1.77 billion from multilateral and bilateral loan drawdowns, while privatisation proceeds would provide N206.18 billion.

The federal government borrowed N6.3 trillion from the Central Bank of Nigeria (CBN) in the first 10 months of 2022 through ways and means.

Ways and Means is a loan facility through which the CBN finances the government’s budget shortfalls.

In October 2022, the federal government promised to repay the N20 trillion debt owed to the Central Bank of Nigeria (CBN) with securities such as treasury bills and bond issuance.

But speaking at the budget presentation, Oniha explained that the move by the federal government to securitise the loans (ways and means) from the central bank would drive up the debt to about N77 trillion.

Although data released by the DMO had put Nigeria’s public debt at N44.06 trillion as of the third quarter of 2022, the federal government plans to borrow more to finance both the supplementary and 2023 budgets.