Domestic Debt: Cost of Servicing Debt Jumps to 23.65% in 2018

• Domestic Debt: Cost of Servicing Debt Jumps to 23.65% in 2018

The Central Bank of Nigeria (CBN) has said the cost of servicing domestic debt rose to 23.65 percent or N1.799 trillion in 2018.

The apex bank stated in its ‘2018 Annual Activity Report‘ released on Wednesday.

Nigeria’s total outstanding domestic debt as at December 2018 was put at N12.4 trillion, a 1.16 percent or N146.35 billion lower than the N12.6 trillion recorded in 2017.

The bank attributed the decline to the government’s preference for foreign borrowing because of attractive rates than the local market.

Breaking down the debt stock, the government borrowed N9.12 trillion or 73.41 percent of the total domestic debt through FGN bonds.

While FGN Savings Bonds accounted for N10.75 billion or 0.09 percent. The federal government raised N200 billion through FGN Sukuk, representing 1.61 percent of the total stock.

FGN Green Bonds, FGN Special Bonds, NTBs and FRN Treasury Bonds constitute N10.69 billion (0.09 percent), N200.54 billion (1.61 percent), N2.7 trillion (21.99 percent) and N150.99 billion (1.21 percent), respectively.

“The increase in the cost of debt servicing in 2018 was attributable to the coupon payments of new instruments (such as FGN Sukuk, Green bonds and FGN Savings bonds) that were issued late in 2017,” the bank stated in the report.