Business
DEBT: Nigerian govt to cut down on domestic short-term borrowing
The Debt Management Office (DMO) has said the Federal Government will be cutting down on domestic short term borrowing in order to achieve longer maturity for its debt portfolio by a ratio of 75 percent of its domestic debts.
The DMO revealed this in its Risk Analysis of the Federal Government of Nigeria’s Total Debt for 2017.
According to the DMO, the refinancing risk of the government’s debt portfolio was very high due to the presence of a large proportion of domestic debt maturing within a period of one year.
The analysis also stated that about 32.61 per cent of Federal Government’s domestic loan portfolio matures within a period of one year, thereby exposing the total public debt to refinancing risk.
According to the DMO, government’s target was to achieve 20 per cent for debts maturing within a period of one year but this could not be achieved as the proportion of such debt to the total debt portfolio stood at 23.53 per cent as of December 31, 2017.
The DMO further said that the refinancing risk for foreign debt was low because it enjoyed an Average-Time-to-Maturity of 14.26 years.
“The Average-Time-to-Maturity of the FGN’s Total Public Debt portfolio as of December 31, 2017, was 11.55 years, which was above the strategic minimum of 10 years, indicating lower exposure of the portfolio to refinancing risk.
Read also: Luxury taxes on yacht, private jet to begin in 2019- Finance Minister
“However, the high proportion of debts maturing within one year was 23.53 per cent, higher than the targeted maximum of 20 per cent, suggesting that the total debt portfolio was exposed to higher refinancing risk.
“While refinancing risk was low for external debt portfolio with ATM (Average-Time-to-Maturity) of 14.26 years, it was very high for domestic debt with ATM of 7.78 years and debt maturing in one year at 32.61 per cent.
“This was attributed to the presence of high proportion of short-term debt in the domestic debt portfolio.
“Part of the debt management strategy of gradually reducing the issuance of short-term debt instruments would be helpful in mitigating the risk and contribute in attaining the strategic target of 75:25 ratio for long to short-term debts in the domestic debt portfolio by the end of the year 2019″, the DMO said in the analysis.
Join the conversation
Support Ripples Nigeria, hold up solutions journalism
Balanced, fearless journalism driven by data comes at huge financial costs.
As a media platform, we hold leadership accountable and will not trade the right to press freedom and free speech for a piece of cake.
If you like what we do, and are ready to uphold solutions journalism, kindly donate to the Ripples Nigeria cause.
Your support would help to ensure that citizens and institutions continue to have free access to credible and reliable information for societal development.
INVESTIGATION: In Kwara, multimillion-naira milk processing plant is abandoned, converted to a chicken outlet
After the government spent millions of naira to establish a milk processing plant in Kwara State that would provided jobs...
SPECIAL REPORT: For Sokoto communities, promise of healthcare is akin to death sentence
In this story, ABDULRASHEED HAMMAD delves into the dire realities of Primary Health Care services in Sokoto State, shedding light...
ICYMI…SPECIAL REPORT: NNPCL hides behind PIA to frustrate disclosure, accountability
Nigeria’s major oil company, Nigerian National Petroleum Corporation Limited (NNPCL), in what appears to be a common practice of disregard...
INVESTIGATION: Multi-million naira Ekiti resort center remains uncompleted a decade after
The multimillion-naira project, expected to comprise recreational buildings, now consists of cassava farmland, a bush used for excretion, and a...
SPECIAL REPORT: Torturous experiences of students with disabilities in Oyo tertiary institutions
For students with disabilities in Oyo state-owned tertiary institutions, learning is a torturous and distressing experience, considering the building structures...