How Nigeria’s N1.95tr budget deficit will alter debt service gains

Nigeria’s debt stock and service bill will receive a notch up as the fourth straight budget deficit plan of about N1.95 trillion in the 2018 fiscal appropriation awaits President Muhammadu Buhari’s assent.The appropriation bill of N9.2 trillion will be signed into law tomorrow.

A financial expert, backed by a source close to the legislature, said the deficit was moderated to N1.95 trillion after lawmakers increased the crude oil price benchmark to $51 per barrel and also stepped up the total spending by about N500 billion.

By the usual borrowing pattern, not less than half of the deficit plan of approximately N1 trillion will be financed by foreign debt deals, while the remainder will go to the local market.

Consequently, the official debt figures at over N21.7 trillion will increase by N1.95 trillion, while debt service bill will get about N180 billion additional provision, given that N2 trillion is already earmarked in the 2018 appropriations for the current debt stock.Currently, the country has been refinancing its local debts, adjudged to be costly and aggravating the nation’s debt service bill by about $500 million foreign loans.

The Guardian, June 19, 2018

 

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