Nigeria's debts now $63.5 billion, as FG borrows N240bn in third quarter

Nigeria's total debts stood at 12.06 trillion naira ($63.5 billion) at the end of March this year, up from 11.2 trillion naira in December 2014, the Debt Management Office (DMO) said on Wednesday.

Nigeria, Africa's top economy and largest oil producer, has been hammered by the 50 percent fall in global oil prices as crude sales account for more than 70 percent of government revenue.

Squeezed government revenues forced this year's budget to be revised and federal projects scrapped or halted while state employees have gone months without being paid.

The national currency, the naira, has also come under intense pressure, losing substantial ground to the dollar on both the official and black market.

The figure announced by the DMO confirms claims by Vice President Yemi Osinbajo that the country's debt stood at some $60 billion at the end of Goodluck Jonathan's term, after he lost to President Muhammadu Buhari in March elections.

Ngozi Okonjo-Iweala, the former finance minister, had however staunchly rejected the claim, saying the debt was much lower, and mostly incurred by states rather than the federal government.

Nigeria's debts have been rising in recent years despite the country having received $18 billion in relief from the Paris Club of creditors in 2005, when its national debt stood at $30 billion.

Meanwhile, the Federal Government is planning to borrow between N180bn and N240bn through the sale of government bonds in the third quarter, the Debt Management Office has said.

According to the DMO, the amount will be borrowed through the issuance of five and 20-year bonds

The debt office had raised N210.22bn ($1.1bn) through government bond sales in the second quarter.

The debt management office is planning to sell the 15.54 per cent 2020 bond at auctions in July, August and September with N35bn to N45bn on offer each month.

It said it would also offer the 12.1493 per cent 2034 bond in July, August and September with N25 to N35bn on offer each month.

Meanwhile, the Federal Government sovereign bond yields rose by more than 10 basis point along the curve on Monday as domestic investors worried about the impact of a weaker currency on inflation and a possible rise in government borrowing, Reuters reported quoting traders.

The most liquid five-year bond yield climbed 12 basis points to 14.71 per cent on Monday, while the 10-year benchmark yield climbed 10 basis points.

Investors had hoped for a rally after the smooth elections in March ended uncertainties about political risk in the economy.

But worries over the government's finances and the continued slide in the currency have spooked investors.

The Central Bank of Nigeria is also planning to borrow about N872.96bn ($4.4b) in new Treasury bills issues between June 18 and September 3.

Data released by the central bank had shown that it would auction N215.12bn worth of the three-month paper, N238.5bn in the six-month debt and N419.34bn worth in the one-year paper.

The total debt proposed for the third quarter is 12.3 per cent short of the N995.5bn raised in the second quarter of the year.

The CBN as to issue treasury bills worth N730.499bn in the second quarter of 2015.

Treasury bills are short-term debt obligation with a maturity of less than one year issued by the CBN through a competitive bidding process bi-monthly.

#economy