Economy

Nigeria’s Total Debt’s N87.37trn in Q3 2023, DMO Confirms

Published

12 months ago

December 9, 2023

Eric

The Director General of Debt Management Office (DMO), Ms. Patience Oniha, has confirmed Nigeria’s debt stock stands at N87.37 trillion as at September 30, 2023.

Oniha, who disclosed this during the interactive session held at the instance of House Committee on Appropriations chaired by Hon. Abubakar Bichi, however, noted that while justifying the rationale behind the borrowing spree, she informed the Parliament that projects implemented by Federal government during the three previous recessions were funded through borrowing.

She said: “Let me speak a bit about public debt as you requested in the letter inviting us.

“The first point is that we have run budget deficit for many years for which the DMO has been raising funds locally and internationally to support the budget.

“The point I would like to make is that as the level of borrowings increases you have to service them so debt services increase also.

“Again, we run budget deficits because we have projects and programmes in the budget that the government wants to run. If we go back from 2015 and 2016, we know we have been through about two or three recessions. So, a lot of that bringing the economy out of recession was funded from borrowing.

“The first one was through the Economic Recovery and Growth Plan and the last one was during COVID. So, debt has increased and so has debt service increased.

“We usually publish the debt data every quarter. So, the most recent data we have in terms of debt stock is as at June 30th of 2023. The figure for public debt is N87.37 trillion. That is made of of external and domestic debt and it is for the Federal Government and the 36 States and FCT.

“Let me quickly add that out of the 87 trillion, about 90 percent belongs to the Federal Government. I believe because of the role the Federal Government plays, we account for the largest share.

“But we report everything because that is best practice. If you compare that figure to last year’s December, it was N46 trillion.

“So, it has grown sharply because we have borrowed…you can say in six months but also because we added the Ways and Means advances to that number. It is public. It was approved.

“The DMO’s role is to manage that debt and make sure it is sustainable and that there is no default because borrowing is not a bad thing but when you borrow you use it well.

“Debt has been growing largely from new borrowings. You see the MTEF for instance that you have approved, it has borrowings in each of the years of N8.7, N10.2 and N11.58 trillion just to buttress the point that as you increase the funds the debt stock grows.

“So, it also also growing because we have issued Promissory Notes and again like I said, Ways and Means advances. We usually like to say that debt stock relative to our GDP is not the issue.

“That has grown from 23 percent in March to about 40 percent in June. The same way the debt stock grew.

“But we need to do, to focus on debt service revenue which is very high. That is why I said the discussions about revenue, we cannot stop talking about them enough.

“So, apart from trying to generate as much revenue as we should, what else should we be doing? We are advocates for a number of initiatives being taken. Should be privatized if those projects can be better managed. You can attract capital. Do the private-public partnership so not everything is on the budget. Because when you put everything on the budget, you cannot get a deficit for which you need to borrow.

“We should strongly support the Fiscal Reform and Tax Policy Committee, we really need to get that working to change the story of us.

“For this year 2023 the DMO was to provide about N8.8 trillion, N7 trillion of that is domestic; meaning we borrow it here on naira. And then there is N1.7 trillion that ordinarily in normal times, we would have issued Euro bonds or from other sources.

“So, out of the domestic of N7 trillion as we speak, we have raised the full amount. So, you can say we have raised a significant amount to fund this budget.

“If the international markets had been covered and we were investing in counties with similar ratings like Nigeria by now we would also have issued a Euro bond.

“We have been extremely supportive of funding the budget and the operations of government,” Ms. Oniha noted.

While speaking on funding of some of the proposed infrastructural projects, she disclosed that the present administration is to ensure direct support with the SUKUK.

According to her, “This year some of that 7 trillion we issued it by way of SUKUK and you will soon begin to see the roads across the FCT.

“Having spoken to what is in the 2023 of which we have raised 7 trillion out of the 8.8 trillion. So we know that in 2024, from the MTEF there is N8.749 trillion.

“So, the levels of borrowing are still high but I think as the MTEF is a rolling document, as the picture looks better on revenues maybe the numbers would be lower.”

Speaking earlier, Chairman, House Committee on Appropriations, Hon. Abubakar Bichi explained that the interactive session with heads of MDAs was aimed at addressing strategies for the rising inflation, reducing the burden of Nigeria’s debt profile, sectoral budgetary allocations, and the dynamics of budget releases.

“Others are economic diversification strategies, revenue generation forecasts, and any useful information that will facilitate the enactment of the bill and effective implementation of the Appropriations Act, 2024.

“Amidst concerns to address the infrastructural gap in the country, eliminate poverty, and generally achieve the 8-Point Renewed Hope Agenda, there is a need to ensure that all loose ends to revenue are tied, as this can have a gross impact on the government’s ability to implement the 2024 Appropriation Bill when passed.

“While the revised MTEF and FSP showed that revenue-generating efforts by the present administration are already yielding fruit, more needs to be done to ensure that government-owned enterprises optimize their revenue-generating potential.

“In light of the above, this interaction is designed to engage relevant stakeholders to provide insight on the perspective of the budget and enable the Committee to play its coordinating role in ensuing allocative efficiency in the 2024 appropriation process,” Hon. Bichi noted.

Business

Budgit: Akwa Ibom Most Creditworthy State in Nigeria

Published

2 weeks ago

November 7, 2024

Admin

Akwa Ibom State has been identified as Nigeria’s most creditworthy state. This is attributed to its strong fiscal position, allowing it to sustain its debt obligations and borrow further.

The verdict was delivered by Budgit, a Nigerian civic organisation that examines state and national budgets and applies technology for citizen engagement with a view at institutional improvement, in its State of the States Report 2024 Edition themed “Moving Healthcare Delivery from suboptimal to optimal”

According to Budgit, Akwa Ibom came tops in the States Performance on Index C, scoring 0.227. The report declared that states who score high are determined “by their debt-to-revenue ratio, and personnel cost to revenue ratio”.

“In contrast, states that rank lower on Index C need to check their appetite for the acquisition of more debt as they appear to be either above or very close to solvency for debt-to-revenue ratio, foreign debt to total debt, debt service-to-revenue ratio, and personnel cost to revenue ratio.

“The lower ranking states may need to rapidly adopt Public-Private Partnership (PPP) models in delivering public goods due to their relatively poorer credit worthiness.

“The state (Akwa Ibom) owing to its relatively low foreign debt to total debt ratio, ranked the most debt-sustainable state among the 36 states”

For Governor Umo Eno of Akwa Ibom State who has not borrowed any funds either domestic or foreign since assumption of office, this report further validates the government’s position on prudent management of state resources for the greater good of the people.

In the same report, Budgit indicated that regarding health expenditure, the state allocated funds for purchasing health and medical equipment, construction and provision of hospitals and health centres, purchasing drugs, renovating and building new primary healthcare centres and boosting health training.

It then stated “Overall, Akwa Ibom is working towards enhancing its healthcare system having spent about N1billion on primary healthcare and medical equipment. Still, there may be opportunities to increase investment in the sector to fully meet the population’s healthcare needs”

Economy

FG Spends $600m on Fuel Importation Monthly, Says Finance Minister Wale Edun

Published

4 months ago

August 8, 2024

Eric

The Minister of Finance and Coordinating Minister of the Economy, Wale Edun has disclosed that the country currently spends $600m on fuel importation monthly.

The minister revealed this during an interview on AIT’s Moneyline programme on Wednesday.

He said that the high import bill is due to neighbouring countries, up to Central Africa, benefiting from the country’s fuel imports.

Edun explained that the situation was the reason President Bola Tinubu removed fuel subsidy, as the country does not know the exact amount of fuel consumed internally.

According to a report by the National Bureau of Statistics (NBS), the country’s petrol import was reduced to an average of one billion litres monthly after President Bola Tinubu removed the fuel subsidy on May 29 last year.

He said, “The fuel subsidy was removed May 29, 2023, by Mr President, and at that time, the poorest of 40 per cent was only getting four per cent of the value, and basically, they were not benefitting at all. So it was going to be just a few.

“Another point that I think is important is that nobody knows the consumption in Nigeria of petroleum. We know we spend $600m to import fuel every month but the issue here is that all the neighbouring countries are benefitting.

“So we are buying not for just for Nigeria, we are buying for countries to the east, almost as far as Central Africa. We are buying. We are buying for countries to the North and we are buying for countries to the West. And so we have to ask ourselves as Nigerians, how long do we want to do that for and that is the key issue regarding the issue of petroleum pricing.”

The minister also clarified that the N570bn fund release to state governments was implemented last year December.

He said, “This actually refers to a reimbursement that they received from December last year onwards and it was a reimbursement I think under the COVID financing protocol but the point is that the states have received more money. They have received more money. Mr President has charged to ensure food production in the states.”

According to him, the recent decision to raise the maximum borrowing percentage in the Ways and Means from five to 10 per cent does not imply that the Federal Government tends to rely on the Central Bank of Nigeria financing.

He also said the welfare of Nigerians remained a key priority for the current administration, particularly ensuring food availability and affordability.

Edun said, “There is a concerted effort to ensure that we have homegrown food available. In the short term, apart from what is being distributed from reserves, there is a window that has been opened for importation because the commitment of Mr President is to drive down those prices now and make food available now.”

He assured all that the measure would not undermine local farmers, as importation would only be permitted after exhausting local supplies.

He said, “So, one of the conditions for this importation will be that everything available locally in the markets or with the millers and so forth has been taken up. We will have auditors that will check that.”

He said these interventions seek to reduce inflation, stabilise exchange rates, and lower interest rates, thereby creating a conducive environment for investment and job creation.

Economy

FG Dismisses Dangote Petroleum As Inferior, Says Refinery Not Yet Licenced, Completed

Published

4 months ago

July 19, 2024

Eric

By Eric Elezuo

A Federal Government of Nigeria petroleum regulatory agency, the Nigerian Midstream and Downstream Petroleum Regulatory Authority, (NMDPRA), has dismissed petroleum products from the Dangote Refinery as inferior, in the guise of those f4om Watersmith and Aradel, making a case for superiority of imported ones.

The revelation was made by the Chief Executive Officer of NMDPRA, Mr. Farouk Ahmed, while responding to questions from a section of the press, a video of which is trending online, adding that the refinery is only 45% completed, and yet to be licenced for operation by the Nigerian government.

Earlier, the Vice President of Dangote Industries Limited, Devakumar Edwin, had alleged that most fuel products imported into Nigeria are substandard, blaming International Oil Companies (IOCs) of frustrating Dangote’s quest for production.

In the short video, which lasted a little over a minute, Mr. Ahmed debunked theories attached to the functionality of the Dangote Refinery, saying it does not have the capacity to ‘feed’ the nation of its petroleum needs, as it stands. He however, refuted arguments that some elements within the oil and gas sector were trying to scuttle the Dangote Refinery.

A transcript of the NMDPRA’s boss short response is as follows:

“It about concerns of supply of petroleum products acros the nationwide, and the claim that we are trying to scuttle Dangote. That is not so. Dangote Refinery is still in the pre-commissioning stage. It has not been licenced yet. We haven’t licenced them yet. I think they are about 45 per cent completed, or completion rather.

“We cannot rely on one refinery to feed the nation, because Dangote is requesting that we suspend or stop imports, especially of AGO and DPK, and direct all marketers to his refinery. That is not good for the nation in terms of energy security, and it is not good for the market because of the monopoly.

“Dangote Refinery, as well as some modular refineries like Watersmith Refinery and Aradel Refinery, are producing between 650 and 1,200 PPM. Therefore, in terms of quality, their products are inferior to imported ones,” he stated.

It will be recalled that only last Sunday, the President, Dangote Industries Limited, Aliko Dangote, while hosting senior journalists from across various media concerns, revealed that the Nigeria National Petroleum Company Limited (NNPCL) owns only 7.2% of stakes in the refinery, and not 20 percent as widely circulated. He also revealed that the refinery is set to begin fuel supply in August 2024.

Many stakeholders and respondents have alleged that there’s no love lost between the government of the day and the Dangote Group, and that explains the hiccup situation surrounding the takeoff the $19 billion refinery.