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DMO allays fears on transfer of N22.7tr debt burden to Nigerians

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The Debt Management Office (DMO) has allayed the fears on the transfer of the Federal Government’s N22.7 trillion debt burden to Nigerians.

The Senate on Thursday approved President Muhammadu Buhari’s request to restructure the N22.7 trillion “ways and means” advance into a bond.

There were insinuations that Nigerians will bear the debt burden following the parliament’s approval of the president’s request.

Ripples Nigeria gathered that the restructuring of the loan will enable the government to repay the debt in 40 years at 9 percent interest per annum instead of the previous 21 percent.

Between 2019 and 2022, the federal government paid N4.12 trillion as interest on debt owed to the Central Bank of Nigeria (CBN) and has budgeted N1.2 trillion to service the N22.7 trillion debt.

READ ALSO: Nigerian states surrender over N78bn allocations to pay external debt

An economic analyst, Kelvin, who reacted to the Senate’s approval of Buhari’s request on his Twitter handle, said: “The Federal Government has now transferred 22.7 trillion naira in debt for Nigerians to pay through a 40-Year Government Bond at 9 percent per annum with 3-Year.”

“It is irresponsible and criminal to transfer N22.7 trillion in CBN overdrafts to Nigerians.”

However, in the Frequently Asked Questions (FAQ) obtained on Saturday, DMO said: “The Securities will be issued to the Central Bank of Nigeria by the Federal Government of Nigeria. The bonds will not be issued to the public by the FGN to raise funds.”

It also made clarification on the issuance of securities to the CBN.

“It will reduce the Debt Service Cost as the new Interest Rate is 9% p.a. compared to the Monetary Policy Rate plus three percent which translates to 21.0 percent p.a. (MPR – 18.0 percent + 3 percent) currently being charged on the Ways and Means Advances.

“The large savings arising from the much lower Interest Rate will help reduce the deficit in the Budget and expectedly, the level of New Borrowings,” the agency added.

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