Nigeria Debt Hits N46.25tr After China Denies $22 Billion Loan Request
The Debt Management Office (DMO) has revealed that Nigeria’s total public debt stock has risen to N46.25 trillion ($103.11 billion) as of December 2022.
According to DMO, the debt stock comprises the total portfolio of the Federal Government, 36 state governments, and the Federal Capital Territory (FCT).
The DMO’s fourth-quarter report was released on the same day that the Nigerian government refuted claims that the Chinese government had turned down its request for a $22 billion loan.
Amidst debt worries, the Director-General of the DMO, Ms. Patience Oniha, assured the media that the government remained resolute and undaunted.
The total public debt stock is a significant measure of Nigeria’s financial obligations and the extent to which it can manage them.
She said: “Nigeria has several sources of funding, other countries and institutions don’t lend based on China. The ratio of 23.20 percent is within the 40 percent limit self-imposed by Nigeria, the 55 percent limit recommended by the World Bank/International Monetary Fund, and the 70 percent limit recommended by the Economic Community of West African States.”
In its statement, the DMO clarified that the total domestic debt stock amounted to N27.55 trillion (about $61.42 billion), while the total external debt stock peaked at N18.70 trillion ($41.69 billion).
The DMO attributed the increase in the total public debt stock to new borrowings by the Federal Government and sub-national governments, primarily to fund budget deficits and execute projects.
The issuance of promissory notes by the FGN to settle some liabilities also contributed to the growth in the debt stock.
To reduce the portfolio, the government was increasing efforts to generate revenues from oil and non-oil sources through initiatives such as the Finance Acts and the Strategic Revenue Mobilisation Initiative, according to the DMO.
The debt to Gross Domestic Product (GDP) ratio as of December 31, 2022, was 23.20 percent, indicating a slight increase from the figure for December 31, 2022, which was put at 22.47 percent.
However, the DMO clarified that the ratio of 23.20 percent is within the 40 percent limit self-imposed by Nigeria, the 55 percent limit recommended by the World Bank/International Monetary Fund, and, the 70 percent limit recommended by the Economic Community of West African States.
Regarding the Chinese loan rejection, a DMO official, who requested anonymity, said, “the rejection of the loan request is not because we were no longer creditworthy or that China no longer has confidence in us as borrowers, but rather, with the COVID emergency several countries including China reviewed their exposures to other countries, especially in terms of debt.”
The official added that “it’s a rejection alright but it can still happen perhaps under different terms in the future.”
“According to reports, the contractor, Chinese Civil Engineering Construction Company (CCECC Nigeria Limited), in collaboration with the Federal Ministry of Transportation, engaged China Development Bank to finance the project for $973,474,971.38,” said the news source.
On Tuesday, “the House of Representatives voted to harmonize the terms of the facility as well as the change of financier from China Exim Bank to China Development Bank,” the news source added.
“The House also approved the conditions provided in the harmonized term sheet as follows: Segment – Kaduna–Zaria–Kano; financier – China Development Bank; type of loan – commercial loan; maturity – 15 years; currency – euro; interest rate – 2.7 percent + 6 months Euribor; commitment fee – 0.4 percent; and upfront fee – 0.5 percent,” the source explained.
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