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Next Administration to Inherit N77 Trillion Debt

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CEM REPORT, FINANCE | The next administration might inherit a public debt of N77 trillion if the Ways and Means Advances from CBN are securitized say Nigeria’s Debt Management Office (DMO).

The office says securitization will enhance debt transparency as the DMO can include the debt in the total public debt stock.

Reacting to reports over public debt stock of the next administration the DMO Director-General, Patience Oniha, said the estimated figure of N77 trillion quoted in the media can only be possible through securitization of Ways and Means advances.

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“Considering reports that the next administration may inherit a total public debt stock of about N77 trillion, the estimated figure can be expected only if the Ways and Means Advances from the Central Bank of Nigeria are securitized.

“Nevertheless, it should be noted that the securitization will enhance debt transparency as the DMO will then be able to include the debt in the total public debt stock.”

Although as of the end of September 2022 Nigeria’s debt stock fell to $101.91 billion compared to $103.31 billion recorded as of June 2022.

However, measured in local currency, total debt stock rose to N44.06 trillion compared to N42.85 trillion recorded as of the previous quarter. This is due to the appreciation of the local currency against the US dollar at the official market.

The DMO boss added that public debt by May 2023 (new administration) would comprise the total public debt of N44 trillion and Ways and Means Advances of N22.77 trillion currently under consideration by lawmakers.

[READ ALSO] CBN Expresses Confidence Over Circulation of New Notes before 31st

Also, she noted that this would include new Promissory Notes estimated at N1.5 trillion to be issued to settle arrears of the FGN and judgment debts and also estimated new borrowings by sub-nationals for the period in view.

“If securitization is achieved, a brief breakdown of the estimated total public debt stock by May 2023 may comprise of the following:

“Current total public debt stock of N44.06 trillion; The Ways and Means Advances of N22.72 trillion currently under consideration by National Assembly.

“The projected debt stock for May 2023 at about N5.567 trillion, representing about 50% of the new borrowing of N11.134 trillion in the 2023 Appropriation Act;

“The N1 trillion Ways and Means Advances to finance the supplementary budget already approved by the National Assembly.

Recall that Nigeria’s Finance Minister, Zainab Ahmed revealed that the N11.34 trillion budget deficit for 2023 is to be financed mainly by borrowings, including N7.04 trillion from Domestic sources, N1.76 trillion from Foreign sources, Multi-lateral-bilateral loan drawdowns of N1.77 billion and Privatisation proceeds of N208.18 billion.

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