Nigeria’s domestic debt payment swallows US$8.4bn
ABUJA - The Federal Government spent a total of N3.49tn (about US$8.4 billion) on domestic debt servicing and payment between January 2015 and September 2017, investigation has shown.
In the same period, the country paid $1.07 bn (about N326.69bn) to service foreign loans obtained by both the federal and state governments.
This shows the wide gap between the size of domestic borrowing and foreign borrowing, which has seen the government spending much of its revenues, especially during the just exited recession, on debt servicing.
Statistics obtained from the Debt Management Office showed that between October 2015 and September 2017, the Federal Government paid out N2.67tn to service local debts.
Breaking the debt servicing payment down, the Federal Government paid a total of N1.02tn for local debt in 2015. This grew to N1.23tn in 2016.
For the first nine months of 2017, the debt servicing payment had already exceeded the amount for 2016 as the Federal Government had committed N1.24tn to local debt servicing.
Most of the payments were for interests incurred on the funds borrowed monthly by the Federal Government using the instrument of the FGN bonds.
In 2016, for instance, the interest paid on the FGN bonds amounted to N839.17bn. In the same period, the interest on Nigeria Treasury bills added up to N335.58bn, while the interest paid on Treasury bonds amounted to N28.99bn. A total principal of N25bn was paid for Treasury bonds.
Similarly, in the third quarter of 2017, interest payment on the FGN bonds accounted for N377.29bn, while that on NTBs amounted to N143.84bn. On Treasury bonds, N9.38bn was paid, while N159.61m was paid on the new instrument, savings bonds.
The huge debt payment is a reflection of both the high interests on local debts and the size of the Federal Government’s domestic debt in comparison to foreign debt. – PUNCH of Nigeria.