The federal government has approved a new medium-term debt management strategy, (MTDS) that will see it seek more loans from both domestic and external sources using long term instruments.
In a press statement by the Debt Management Office (DMO), for the period 2020-2023, Nigeria’s borrowings will be from both domestic and external sources, with a larger proportion of new borrowings coming from domestic sources using long-term instruments, while for external borrowing, concessional funding from multilateral and bilateral sources will be prioritised.
Part of the targets in the new MTDS document include raising total debt to GDP from the current 25 per cent to 40 per cent. This is to accommodate new borrowings to fund budget deficits and other obligations of government, promissory notes to be issued to settle government arrears, and, the ways and means to advance at the Central Bank of Nigeria.
The new ratio is still well below the World Bank and International Monetary Fund recommended threshold of 55 per cent for countries in Nigeria’s peer group.
Also to further strengthen the domestic debt market and optimise access to both concessional and commercial sources of funding, portfolio composition would stand at maximum of 70 per cent for domestic debt while external debt would be minimum of 30 per cent.
The DMO noted that to sustain the issuance of longer-tenured instruments with tenors of 10 years and above, and in order to effectively manage refinancing risks, average tenor of debt will have a minimum of 10 years, while long-term and short-term domestic debt markets will have a minimum of 75 per cent and maximum of 25 per cent respectively.
Achievements recorded in the previous 2016-2019 MTDS include total public debt as percentage of GDP stood at 19 per cent below the maximum target of 25 per cent, while domestic and external debt mix recorded significant improvement.
You may be interested
Italian Ambassador, Luca Attanasio Shot Dead During Attempted Kidnapping In DR CongoWebby - February 23, 2021
The Italian ambassador to the Democratic Republic of Congo, Luca Attanasio, was killed on Monday while travelling in a United…
10 Killed In Renewed Ebonyi Communal ClashWebby - February 23, 2021
Previous articleProtesters shut Lagos/Benin Road over extortion
American Singer, 6lack Says Wizkid Dropped The Best Album During This COVID-19 PandemicWebby - February 23, 2021
American singer and rapper, 6lack has sparked controversy on the social media after he claimed that Nigerian singer, Wizkid, dropped…