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Monday, 1 August 2016

Nigeria's Domestic Debt: Continues to rise

Local debt servicing gulps N1tn for the first time in 2015.
Statistics from the DMO shows the money comprises of NGN25BN spent on repayment of the principal and N993.13BN on interest payment within the year.

The report indicated that this year alone, even in the face of cash crunch when the Federal Ministry of Finance is yet to make any quarterly release in implementing the 2016 budget, N446 billion had already been paid out to creditors in debt servicing.

FGN bonds debt servicing accounted for 62.41 per cent of the total debt service payment, while payments in respect of the Nigerian Treasury Bills (NTBs) and Treasury Bonds were 31.83 and 5.76 per cent respectively.

Trend analysis shows a continued rise in federal government's domestic debt service payments from 2011 to 2015, which was attributed to the increase in domestic debt stock, as well as the higher interest rates, leading to the rise in the cost of borrowing in the domestic debt market.

Over the past five years, Nigeria has paid $25.22 billion (an estimated N5 trillion based on the old fixed exchange rate of N197/$) in repayment of loans and service charges from 2011 to 2015.

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