Nigeria’s incoming president to inherit ₦77trn debt

Muhammadu Buhari

Patience Oniha, Director General of the Debt Management Office (DMO) revealed that the incoming president will inherit approximately ₦77 trillion in debt when President Muhammadu Buhari’s tenure ends in May, 2023.

Oniha made the remarks while fielding questions from journalists on Wednesday during the public presentation and breakdown of the highlights of the 2023 appropriation act in Abuja.

Buhari signed the ₦21.83 trillion 2023 budget into law on Tuesday, with a ₦11.34 trillion deficit.

The deficit is equivalent to 5.03 percent of the country’s Gross Domestic Product (GDP).

The Federal Government (FG) would finance the deficit through borrowing, according to Zainab Ahmed, minister of finance, budget, and national planning.

Concerning the funding sources for the ₦11.34 trillion 2023 budget deficit, the minister stated that 22% of projected revenues will come from oil-related sources, while 78% will come from non-oil sources.

According to Ahmed, ₦7.04 trillion would be borrowed from domestic sources, ₦1.76 trillion from foreign sources, ₦1.77 billion from multilateral and bilateral loan drawdowns, and ₦206.18 billion from privatization proceeds to fund the deficit.

In the first 10 months in 2022, the Federal Government (FG) borrowed ₦6.3 trillion from the Central Bank of Nigeria (CBN) through various means.

Ways and Means is a loan facility that the CBN uses to finance the government’s budget deficits.

In October 2022, FG announced that it will repay the ₦20 trillion debt owed to CBN with securities such as treasury bills and bond issuance.

However, during the budget presentation, Oniha stated that the federal government’s decision to securitize the central bank’s loans (ways and means) would increase the debt to around ₦77 trillion.

Despite DMO data putting Nigeria’s public debt at ₦44.06 trillion as of the third quarter of 2022, the federal government intends to borrow more to fund both the supplementary and 2023 budgets.

“There are a lot of discussions on the ways and means. In addition to the significant cost saving in loan service we would get by securitising it, there is an element of transparency in the sense that it is now reflected in the public debt stock,” she said.

“Once it is passed by the national assembly, it means we will be seeing that figure included in the public debt. You will see a significant increase in public debt to ₦77 trillion.

“The other area of the debt stock we are trying to highlight is to say the debt stock is also growing from the issuance of promissory notes, which are not true borrowing as such by the government. “