Devaluation has put the real value of the country’s debt stock at around N18.9 trillion, when considered at the official rate of N307.79 per dollar, according to figures from the Debt Management Office.
The additional naira stock (per dollar) that would be needed to service existing debt will cause the country to lose about N6.33 trillion, a near-equivalent of the 2016 budget, when compared to N12.6 trillion at N197 per dollar as at December 31, 2015. It is also a disincentive for future external borrowing despite a positive debt-to-GDP ratio.
“Hiding under the mantra of low debt-to-Gross Domestic Product is deceitful,” a public sector financial analyst, who asked not to be named, told The Guardian in Lagos at the weekend. “The economy is in recession and cannot churn out those activities anymore.
“With more than 21 per cent of the entire budget dedicated to debt service and more than 33 per cent of the total budget being in deficit, the budget performance is now made worse with near-non-activities called recession. The reality is daunting,”the source said.
The additional N6.33 trillion required to pay off Nigeria’s external debt represents 20.58 per cent, a one-fifth of its estimated $296 billion, or N91 trillion GDP.
The national debt stock consists of external obligations for both federal and state governments estimated at $11.3 billion (about N3.5 trillion); domestic obligations of $37.5 billion (about N11.5 trillion) and $12.7 billion (about N3.9 trillion) for federal and states respectively.
The devaluation was necessitated by the plummeted foreign exchange earnings, which created huge unmet demand due to the shortage of dollar and naturally erased the value of the local currency through speculations.
The debt report released by the Debt Management Office came two weeks behind schedule and put the debt stock by June 30, 2016 at $61.45 billion. The report stressed that the figure was higher in naira value than the $71.66 billion posted on March 31, 2016.
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