The Federal Government spent N2.21tn on domestic debt servicing in the first nine months of 2018. Statistics obtained from the Debt Management Office in Abuja on Tuesday showed that the Federal Government spent N633.77tn in the third quarter of the year.
The expenditure brought the total expenditure on domestic debt servicing to N2.21tn in the first nine months of the year. This means that the Federal Government has already overspent on domestic debt servicing the N2.01tn that it had proposed for total debt servicing in 2018.
Analysing the debt service payment in the third quarter of the year according to instruments showed that N447.01bn was spent on FGN Bonds; N9.37bn on Treasury Bonds; N168.6bn on Nigerian Treasury Bills; N8.3bn on Sukuk Bond and N281.35m on Savings Bonds.
The Federal Government had spent a total of N656.59bn in the second quarter of the year on servicing domestic debt. The amount was made up of N359.23bn spent on redemption of Nigerian Treasury Bills and a total of N297.37bn spent on interest charges on the Federal Government’s domestic debt between April and June that made up the second quarter of the year.
A total of N923.3bn had been spent on servicing of domestic debt in the first three months of the year (January to March). A breakdown of the debt servicing data for the first quarter of the year showed that the Federal Government spent a total of N643.63bn on the payment of interest, while it spent a total of N279.67bn on the redemption of matured Nigeria Treasury Bills within the first three months of the year.
A breakdown of the interest paid in the second quarter of the year showed that a total of N156.08bn was paid on Nigeria Treasury Bills and N130.93 was paid on FGN Bonds. Similarly, a total of N9.38bn was paid on Treasury Bonds; N257.69m was paid on FGN Savings Bond while N718.53m was paid on a new instrument, the FGN Green Bond.
The cost of servicing debt is a reflection of the country’s rising debt profile, especially domestic debt, although efforts are being made to reduce domestic debt commitment in favour of more foreign loans. The servicing of Nigeria’s domestic debt gulped N1.23tn in 2016, while it gulped a total of N1.48bn in 2017. The nation’s current debt strategy includes a move to get more foreign loans and less domestic ones in order to take advantage of the lesser interest rate from the international debt market. The government plans to raise the foreign component of the debt to 40 per cent.