The latest data release from the DMO shows the external debt of the 36 states and the FCT at US$3.65bn at end- June. Since these borrowings are guaranteed by the FGN, they are included in the figure of US$11.27bn for the federal government’s external debt. It will be no surprise that Lagos State accounted for close to 40% of the debt, given its superior credit ratings and the more persuasive story it has to tell. Only five states, the four in the chart plus Ogun, had external debt above US$100m at end-June, leaving US$1.58bn divided between 31 states and the FCT.
The states’ creditors were all multilateral agencies other than France’s state development bank, the agence française de développement, which had total exposure of US$150m.
The debt increased by just US$280m in six months. This reflects the financial strains on the states due to the slide in the oil price and the fact that the borrowings, being guaranteed, have to be approved by federal government agencies including the DMO.
Separate DMO data put the domestic debt of the states at N2.50trn (currently US$8.06bn) at end-2015, an increase of N840bn over one year. The total excludes N680bn in FGN long bonds issued last year in a restructuring of state governments’ commercial debt.
The FGN has launched three separate debt relief programmes for states so that they could clear salary and pension arrears to their employees (Good Morning Nigeria, 09 August 2016). The call in the latest post-meeting communique from the MPC for the settlement of the arrears (to boost household consumption) tells us that it is work in progress.