FGN’s Quarterly Domestic Debt Service Payments Increased in Line with the Stock of Domestic Debt

Must Read

List of United Bank for Africa (UBA) Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number that usually identifies both the bank and the branch where an account is held. The sort...

How To Block Your Bank Account And SIM Card In Case Of Emergency

Losing your phone and wallet or having them stolen can be very frustrating. However, in case that happens to...

List of Access Bank Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number which usually identifies both the bank and the branch where an account is...
- Advertisement -

Our chart today shows the FGN’s quarterly domestic debt service payments from Q3 2014 through to Q3 2017. The burden has increased in line with the stock of domestic debt, not forgetting naira interest rates over the period.

We cite the DMO data series rather than the draft implementation report for Q3 2017 from the Budget Office of the Federation, which has rather higher figures according to commentary yesterday in the local media. When the official data cover total debt service, we should remember that 90% was paid on domestic obligations.

From the 2018-2020 Medium Term Expenditure Framework and Fiscal Strategy Paper, we see total debt service excluding the sinking fund this year at N2.03trn, equivalent to 35.9% of total FGN revenue.

There is, however, some positive news to share. On the basis of total domestic debt service payments in 9M 2017 and the mid-2017 stock of domestic debt, we arrive at an average cost of borrowing of about 15.5%. From the auction results for FGN paper since end-August, which was the date of the framework paper, we can identify yield compression of about 350bps for the bonds.

Read Also:  A Little Breathing Space For The DMO...
- Advertisement -

The prevailing secondary market rates of between 13.00% and 13.50% point to a substantially lower burden this year than projected in the framework once we make allowances for the continuing programme of externalization (which itself generates savings due to the rate differentials).

FGN’s Quarterly Domestic Debt Service Payments Increased in Line with the Stock of Domestic Debt - Brand Spur

We conclude with an obligatory note of caution. The savings of, say, +/- N350bn could be lost in pre-election recurrent spending. Alternatively, they could be channeled into capital programmes for Nigeria’s ailing infrastructure. Given the plans for Eurobond issuance and repayment of maturing NTBs this quarter, clearly, we do not expect a retracement of naira rates.

 

- Advertisement -
FGN’s Quarterly Domestic Debt Service Payments Increased in Line with the Stock of Domestic Debt - Brand SpurFGN’s Quarterly Domestic Debt Service Payments Increased in Line with the Stock of Domestic Debt - Brand Spur

Subscribe to BrandSpur Ng

Subscribe for latest updates. Signup to best of brands and business news, informed analysis and opinions among others that can propel you, your business or brand to greater heights.

- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here
Read Also:  eTranzact Appoints Toluwalope MD/CEO

This site uses Akismet to reduce spam. Learn how your comment data is processed.

FGN’s Quarterly Domestic Debt Service Payments Increased in Line with the Stock of Domestic Debt - Brand SpurFGN’s Quarterly Domestic Debt Service Payments Increased in Line with the Stock of Domestic Debt - Brand Spur

Latest News

Was minimum wage in Nigeria actually increased?

In April 2019, President Muhammadu Buhari signed the new minimum wage bill into law amid rising living costs and...

5 foreign TV series that would increase your strategic thinking mindset

Watching movies serves as a form of entertainment and also a means by which people get educated more about human behaviour, strategy pop culture...

May and Baker Launches Malact to Combat Malaria

May & Baker Nigeria Plc, a local pharmaceutical company, has introduced a new anti-malarial drug to treat malaria in the country. The new drug,...

May & Baker Nigeria appoints new Executive and Managing Director as Nnamdi Nathan Okafor takes a bow

Sequel to the Board Meeting of May & Baker Nigeria Plc held on Thursday, 26th November 2020 at the Muson Centre, Onikan, Lagos, the...

Household Consumption Expenditure Contracts By -0.08% in Q2 2020 – NBS

In the first quarter of 2020, Nigeria's real GDP at basic prices grew by 1.87% but declined in the second quarter by -6.10% on a...
- Advertisement -
BrandsPur Weekly Cartoons
- Advertisement -FGN’s Quarterly Domestic Debt Service Payments Increased in Line with the Stock of Domestic Debt - Brand SpurFGN’s Quarterly Domestic Debt Service Payments Increased in Line with the Stock of Domestic Debt - Brand Spur