Nigeria’s total domestic debt stock increased by 10.38%, hits N13.41 trillion in Q1

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Nigeria’s total domestic debt stock increased by 10.38 per cent to hit N13.41 trillion in the first six months of this year. That is from N12.15 trillion in the corresponding period of 2018, the Central Bank of Nigeria (CBN) has said.

The apex bank, which disclosed this in its “Half year activity report 2019” posted on its website yesterday, however, stated that the cost of debt servicing fell by 15per cent to N800.73 billion at end-June 2019, from N941.99 billion at end-June 2018.

According to the CBN, the increase in the country’s total domestic debt stock during the review period was caused by the Federal Government’s continued reliance on public financing to support its revenue shortfalls.

The CBN stated: “The total domestic debt outstanding at end-June 2019 stood at N13,412.80 billion, representing an increase of N1,261.36 billion or 10.38 per cent, over N12,151.44 billion in the corresponding period of 2018.

“The debt stock during the review period comprised FGN Bonds worth N9,691.42 billion or 72.26 per cent, Nigerian Treasury Bills (NTBs) worth N2,651.51 billion or 19.77 per cent and FRN Treasury Bonds of N125.99 billion or 0.94 per cent. Others included FGN Promissory Notes of N707.76 billion or 5.28 per cent, FGN Sukuk worth N200.00 billion or 1.49 per cent, FGN Green Bonds worth N25.69 billion or 0.19 per cent and FGN Savings Bonds of N10.43 billion or 0.08 per cent,” it added.

The regulator noted that despite the higher debt stock, the cost of debt servicing declined by 15 per cent to N800.73 billion at end-June 2019, from N941.99 billion at end-June 2018.

It attributed the drop in debt servicing costs to the fall in yields on the securities issued in the markets.

Giving a breakdown of the debt servicing cost, the CBN stated that: “interest expense on NTBs stood at N166.63 billion or 20.81 per cent, coupon payments on FGN Bonds, FGN Savings Bonds and FGN Green Bonds accounted for N609.84 billion or 76.16 per cent, N0.66 billion or 0.08 per cent and N0.72 billion or 0.09 per cent, respectively. Rental payments on FGN Sukuk were N16.02 billion or 2.00 per cent, while interest paid on FRN Treasury Bonds was N6.87 billion or 0.86 per cent.”

On developments in the foreign exchange market, the CBN stated that it sustained its direct intervention in the inter-bank foreign exchange market to manage demand pressure and ensure exchange rate stability during the review period, selling a total of $8.28billion at the foreign exchange market.

Specifically, it stated that: “This comprised US$2,142.63 million at the Inter-bank spot, US$550.70 million for Invisibles, US$810.00 million for SMEs, US$212.11 million at the I&E window and US$4,572.03 million as Forwards sales.

“On the other hand, the Bank purchased $9,368.92 million at the inter-bank segment, hence a net purchase of $1,081.40 million by the Bank. At the Forwards segment, the sum of $4,979.46 million matured, while $2,552.01 million was outstanding at end-June 2019.”

It noted that in the corresponding period of 2018, $9.49billion billion was sold at the Inter-bank segment “comprising US$1,546.43 million at the Inter-bank spot, US$768.70 million for Invisibles, US$637.00 million for SMEs, US$1,236.69 million at the I & E window and $5,311.09 million as Forwards sales.”

Continuing, the CBN stated: “The Bank purchased $6,436.47 million at the inter-bank segment, resulting in a net sale of $3,063.44 million. The sum of $5,681.77 million matured at the Forwards segment, while $1,469.04 million was outstanding at end-June 2018.”

The Banking watchdog attributed the increased sales at the inter-bank spot market in H1’ 19 to its foreign exchange management strategy of sustaining liquidity and maintaining exchange rate stability.

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