Excluding CBN Overdraft, Nigeria’s Public Debt to Peak at N45trn
Nigeria’s public debt will reach N45 trillion as the Debt Management Office (DMO) plans to borrow an additional N6.39 trillion to finance the 2022 budget deficit. This however excludes the total sum borrowed from the monetary authority since 2015.
In 2021, DMO hints that total public debt inched near N40 trillion, excluding the amount raised by the Federal Government under the Central Bank of Nigeria’s Ways and Means window.
This means that total public debt for the country is under-declared, according to analysts that see the apex bank’s persistent overdraft given to FG as a breach of the CBN 2007 Act.
The decision by the Nigerian government to access what analysts call emergency Eurobond amidst the Russia-Ukraine war signals pressures on fiscal authority to deliver revenue expectation. It was noted that fresh dollar raise was conducted silently.
In the last quarter of 2021, Nigeria had raised $4 billion from the international debt capital market, $1 billion above $3 billion initially targeted. In 2022, there will be additional foreign currency borrowings, though DMO said otherwise.
With subsidies payments, there will be a run on fiscal performance, according to analysts. Moody’s said the Nigerian government lack institutional capacity to implement reforms following the postponement of the implementation of the Petroleum Industry Act.
“From a fiscal standpoint, the net impact of elevated crude oil price is biased to the downside, with limited pass-through to the federation account.
“For context, while the rebound in crude oil price resulted in a 30.9% year on year increase in Nigeria’s gross revenue in 2021, the net amount available for oil and gas revenues transferred to the Federation Account by the NNPC contracted by 51.0% due to expensive subsidy payments”, CardinalStone said in a commentary.
During the week, Patience Oniha, Director-General of the DMO, explained that the overall deficit in the 2022 budget was N6.30 trillion, representing 3.46 per cent of the country’s Gross Domestic Product (GDP).
Oniha said that the budget deficit was to be financed mainly by borrowings from both domestic and foreign sources, as well as privatisation proceeds.
“N2.57 trillion will come from domestic sources, N2.57 trillion from foreign sources, N1.16 trillion from multilateral and bilateral loan drawdowns and N90.7 billion from privatisation proceeds,’’ she said. The DG said that the 2022 aggregate Federal Government spending was projected at N17.1 trillion, which is 18 per cent higher than the 2021 budget.
Recurrent (non-debt) spending, estimated to amount to N6.9 trillion, is 40 per cent of total expenditure and 20 per cent higher than the 2021 budget, according to budget detail.
“Aggregate capital spending of N5.96 trillion is 35 per cent of total expenditure,’’ she said. DMO Chief added that debt service in the 2022 budget was N3.6 trillion, making it 21 per cent of total expenditure and 34 per cent of total revenue. READ: CBN Overdraft to Nigerian Govt. Increased to N13.11 Trillion
“Provision to retire maturing bonds of N270.7 billion to local contractors is 1.6 per cent of total expenditure.
“This provision is in line with the Federal Government’s commitment to offset accumulated arrears of contractual obligation dating back over a decade,’’ she said
CardinalStone analysts’ review hint that Nigeria will spend N19.7 trillion in 2022 with total revenue expectation pegged at N10.7, resulting in a deficit of N9 trillion. Federal Government will use N7.7 trillion on non-debt recurrent expenditure, N3.6 trillion for debt service and N5.4 trillion for capital projects.
Amidst fiscal slippage, FG’s receipt from oil export is expected to contribute N3.4 trillion or about 32%. The Federal Government expects N2.1 trillion from tax collections and other sources to bring in N5.2 trillion. #Excluding CBN Overdraft, Nigeria’s Public Debt to Peak at N45trn
READ: Uncertainties as FG Borrowings from CBN Overdraft Facility Skyrocket
