From the DMO's quarterly data release, we learn that at end-March, the FGN's domestic debt stock totalled NGN16.51trn (USD40.7bn at the NAFEX/I&E rate), equivalent to 10.8% of 2020 GDP. The stock increased by NGN490bn in the quarter and NGN1.98trn over 12 months. Outstanding FGN bonds increased by NGN640bn over the three months, reflecting the DMO's challenging remit to raise a record NGN2.34trn this year from sales of domestic debt. Its record in selling other naira debt instruments has been mixed. Probably its greatest success has been with the sukuk, which represented NGN360bn of the total at end-March.
FGN bonds and Treasury bills (NTBs) together comprise 91.3% of the total stock.
The stock includes promissory notes of NGN940bn issued to settle arrears due to contractors and other domestic creditors of the FGN. Maximum issuance at the outset of the scheme was estimated at NGN2.70trn.
Total public debt amounted to NGN33.11trn at end-March, equivalent to 21.7% of GDP. This is the DMO's measure of FGN and state governments' debt, both domestic and external. It has set a ceiling on this measure of 40% of GDP, which leaves borrowing headroom of about NGN28trn.
A broader measure would include bonds issued by AMCON (held by the CBN), and the obligations of the NNPC and other public agencies. This would bring the burden to no more than 30% of GDP. We are not including the proposed conversion of the FGN's borrowings from the CBN (ways and means advances), said to total NGN10trn, into 30-year bonds. On conversion, the new instruments would be included in public debt. In line with best practice, we also exclude OMO bills, issued by the CBN for purposes of liquidity management, and contingent liabilities such as sovereign guarantees.
This debt stock/GDP ratio would still compare very favourably with peer EMs and frontiers. For Kenya the comparable figure at end-2020 was 67.8%.
The mix was 38% external and 62% domestic at end-March. For Kenya it was 52% external and 48% domestic.
Deficit financing (other than unspecified asset sales) in the 2021 budget would increase the public debt stock at end-2020 by about 16%.
FGN domestic debt (NGN trn)
Sources: Debt Management Office (DMO); FBNQuest Capital Research
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