The Federal Government of Nigeria has spent not less than $398.7 million on Debt Services/Payments between January and April 2019, data obtained from the Central Bank of Nigeria (CBN) official website has revealed.
The data, however, did not specifically mention if the debt services/payment were used to service Treasury Bills, Bond and or Eurobond.
But the breakdown showed that debt services/payment in January stood at $65.44 million but increased to $193.4 million in February.
The data from the apex bank, also, revealed that Debt Service/Payment moved to $95.75 in March and close April at $44.05 million.
Meanwhile, the debt services/payment in the first four months of 2018 was around $249.9 million while the total debt services/payment in 2018 from the figure obtained from the CBN website stood at $1.47 billion.
However, the Ministry of Budget and National Planning had said debt servicing for 2019 is N2.14 trillion, 24.24 per cent of the Federal Government plan to spend.
The bankers’ committee of the CBN expressed concern and sympathised with the fiscal authorities over the growing fiscal deficit, external debt and debt service, and stressed the need to closely monitor the public procurement process in order to improve efficiency in public resource management.
A member of the committee, Dr. Robert Chikwendu in his statement at the last Monetary Policy Meeting (MPC) that was held in March said: “The elevated public debt levels especially those arising from the external bond issuances are likely to limit the country’s ability to aggressively pursue growth, whilst containing any inflationary pressures.
“As at 31st December 2018, there was a 12.25 per cent year-on-year growth for total public debt.
While the share of domestic debt has dropped in favour of external debt as part of government’s strategy, the preference for external bond issuances (which is popular amongst international investors who permanently maintain a search for yield behaviour) rather than concessional external borrowing from bilateral and multilateral windows raise key sustainability concerns.
“It is imperative that fiscal policy in Nigeria should continually ensure that debt levels remain less elevated, highly concessional, and sustainable and that recurrent expenditures are constantly rationalised.
Another member, Mike Idiah said, “The Federal Government’s actual fiscal deficit has continued to widen and concurrently, the debt level and debt service have continued to rise.
“A major driver of the deepening fiscal deficit and debt levels is the under-performance in revenue generation largely due to non-diversification of revenue and continuing weakness in domestic economic performance in spite of slight recovery in the international price of crude oil.
Another major concern is the rapidly growing cost of debt servicing, fuelled by increasing public debts with the potential for crowding out the private sector.
” He urged the government to step up domestic revenue mobilisation and significantly reduce the pace of external debt accumulation because of the challenges of rising external debt servicing, as well as interest rate and exchange rate shocks.
“The proposed increase in Value Added Tax (VAT) is in the right direction,” he added.
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