The Debt Management Office (DMO) on Friday said Nigerian government was
considering taking loan from foreign sources to fund the 2020 budget
signed into law by President Muhammadu Buhari a month ago.
On
December 17, 2019, Mr Buhari, who travelled to the United Kingdom today
for an investment summit starting next Monday, signed the 2020
Appropriation Bill into law. His government proposed to spend N10.33
trillion in this fiscal year, which kicked off on January 1.
In a
chat with newsmen today, Director General of DMO, Ms Patience Oniha,
said the President Buhari administration was planning new borrowings of
N1.60 trillion, with N850 billon (about $2.8 billion at an exchange rate
of N306/$1) and N744.99 billion for external and domestic loans
respectively.
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She
noted that the foreign loans would come mainly from concessionary and
semi concessionary sources due to the lower interest rate and longer
tenors, adding that, “Any shortfall thereafter may be raised from
commercial sources.”
The debt office noted that in the 2019
budget, a provision was made for an external borrowing of N802.82 ($2.62
billion), but this was never pursued due to late passage of the
appropriation act.
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“The
2019 Appropriation Act provided for a total new borrowing of N1.61
trillion split equally between domestic and external, only the
domestic component of N802.82 billion was raised due to the late passage
of the 2019 Appropriation Act and the expectation that the
implementation of the 2020 budget would commence on January 1, 2020,”
the DMO said.
However, there are indications that the external borrowing will be done.
The
debt office also said last year, the ratio of domestic debt to external
debt stood at 69:31 as at September 2019, an improvement over the 71:29
as at September 2018 compared with the target of 60:40 in the
Medium-Term Debt Management Strategy.
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It
also said the ratio of long term to short term debt in the domestic
debt as at September 2019 was 80:20, which shows that the target of
75:25 had been outperformed by September 2019, an improvement over the
ratio of 73:23 recorded in September 2018.
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