Coordinating Minister for the economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala

Coordinating Minister for the economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala
| credits: File copy

Despite calls by economists for the country to reduce its external debt profile, figures from the Debt Management Office show that it rose by $143m in the first quarter of 2013 to $6.67bn from $6.527bn at the end of last year.

It rose consistently throughout 2012. For instance, as of March 31, 2012, it stood at $5.91bn; by June 31, 2012, it rose to $6.03bn, edging higher to $6.3bn by September 31 before closing the year at $6.527bn.

The development caused analysts, including the Governor of the Central Bank of Nigeria, Mr. Lamido Sanusi, to warn that it was not in the nation’s best interest.

In December 2012, at the Honorary International Investment Council Conference in London, Sanusi argued that if the existing level of borrowing from big nations continued, the huge debt profile would place “undue burden on posterity.”

“We are borrowing more money today at a higher interest rate, while leaving the heavy debt burden for our children and grandchildren,” he had said.

In December, the total external debt stood at $6.53bn; and despite promises by the Federal Government to slash it, it had continued to rise.

In spite of the calls for caution, data obtained from the DMO website on Sunday showed that in one year, March 31, 2012 to March 31, 2013, the country’s external debt rose by $758.32m.

Speaking in Lagos in March this year, the Minister of State for Finance, Dr. Yerima Ngama, had said Nigeria would slash its domestic debt, which had been a source of concern for economists.

Ngama, who disclosed that it cost the government N699bn to service the debt in 2012, attributed the planned slashing to the move to reduce the debt to double-digit interest rates.

While there has been no success in reducing the external debt, the DMO data for the first quarter of 2013 showed that the government, however, reduced its domestic stock by N44.2bn during the period.

As of December 31, 2012, the Federal Government’s domestic debt stock was N6.537tn with FGN bonds accounting for 62.41 per cent (N4.08tn) of the figure, while Treasury Bills and Treasury Bonds accounted for 32.47 per cent (N2.12tn) and 5.12 per cent (N334.56bn), respectively.

Latest data from the DMO, however, showed that as of March 31, 2013, the government’s domestic debt stock was N6.493tn.

A breakdown of the data, which was posted on the DMO website, indicates that FGN Bonds at N3.82tn now accounts for 58.84 per cent of the debt, while Treasury Bills (N2.34tn) and Treasury Bonds (N334bn) accounts for 36.01 per cent and 5.15 per cent of the amount, respectively.