The FGN’s domestic debt stock amounted to N11.06trn (US$36.3bn) at end-December, equivalent to 10.7% of annual GDP according to the projections in the 2017-2019 Medium-Term Expenditure Framework. This is a very healthy ratio for a sovereign rated B+/B. It remains so when we allow for the unrecorded debts of N2.2trn of the FGN which the administration unearthed in mid-December. These debts are to be securitized in the form of ten-year pro-notes, and are due to oil marketers, contractors, non-oil exporters and other private-sector operators.
The domestic debt stock increased last year by N2.22trn, which happens to have been the projected federal deficit for 2016. However, the budget projected net domestic borrowing of N1.20trn, which reminds us how limited progress the FGN made in securing external finance to cover its deficit.
The share of NTBs in the reported stock increased by, and that of FGN bonds correspondingly fell by two percentage points in H2 2016.
To expand federal (sovereign) into public domestic debt, we have to make some additions: the bank borrowings of state governments, which the DMO estimated at N2.82trn at end-September, their outstanding bonds, the bonds issued by AMCON, and the debts of the NNPC and other public agencies.
When we include the unrecorded debts unearthed in December, we have a public domestic debt stock approaching 25% of 2016 GDP. In line with common practice, this excludes contingents such as government guarantees.
Sources: Debt Management Office (DMO); FBNQuest Research
We will turn in forthcoming dailies firstly to the far more challenging data for domestic debt service, and thereafter to the light external debt burden.
