15 August 2018 : Nigeria’s total debt reduced from N22.7 trillion at the end of Q1’18 to N22.4 trillion at the end of H1’18, according to data from the Debt Management Office (DMO). This decline was driven by a moderation in total Federal government domestic debt from N12.6 trillion to N12.2 trillion in the same period as external debt rose marginally. Analysts note that this is in line with the government’s overall strategy of shifting away from domestic borrowing, and H1’18 figures indicate success on this front— the proportion of external debt has risen to 30% in H1’18, albeit still lower than the target of 40%.
The decline in Nigeria’s debt is also a welcome development considering slight concerns over debt sustainability, but the primary issue continues to be the country’s debt servicing costs, which analysts conservatively estimate at 30% for Q1’18. Given the reasonable size of Nigeria’s debt (c.20% of GDP), efforts to maintain debt sustainability must focus on attaining lower interest rates and crucially, expanding the government’s revenue base – particularly non-oil revenue.
Reporting for EasyKobo on Wednesday ,15 August 2018 in Lagos, Nigeria
Source: Vetiva Capital Management Limited