- Domestic Debt Servicing Gulps N656.59bn in Three Months
The Federal Government spent a total of N656.59bn in the second quarter of the year on servicing domestic debt; statistics obtained from the Debt Management Office have shown.
The amount is made up of N359, 231,610,000 spent on redemption of Treasury Bills and a total of N297, 367,747,511.92 interest charges on the Federal Government’s domestic debt between April and June of the year.
With the latest amount spent on debt servicing, the Federal Government has so far spent a total of N1.58tn on debt servicing in the first six months of the year.
A total of total of N923.3bn was 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 Treasury Bills within the first three months of the year.
On comparison basis, the Federal Government spent N346.26bn less in interest payment in the second quarter than it spent in the first quarter of the year.
However, in the second quarter of 2017, the government spent a total of N235.39bn on interest payment, which is less than what was spent in the second quarter of the year on the same matter.
A breakdown of the interest paid in the second quarter of the year showed that a total of N156.08bn was paid on Treasury Bills and N130.93 was paid on the FGN Bonds.
Similarly, a total of N9.38bn was paid on Treasury Bonds; N257.69m was paid on the 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 domestic debt gulped N1.23tn in 2016 while it took 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.
Of the nation’s N22.38tn debt as of June 30, N12.15tn is domestic debt contracted by the Federal Government.