DMO says N1.23tn spent on debt servicing in 2016

Statistics by the Debt Management Office (DMO) has shown that serving Nigeria’s domestic debt gulped N1.23tn in 2016.
This is against N1.02 trillion the Federal Government spent in 2015 on servicing its domestic debts. This comprised N25 billion spent on the repayment of the principal and N993.13 billion spent on interest.
According to the statistics, the highest interest payment of N839.79 billion was made on funds borrowed using the instrument of FGN Bonds.
In addition, N335.58 billion interest was paid on Nigeria Treasury Bill, while debts incurred via Treasury Bonds recorded a debt service payment of N29 billion last year.
The N1.23tn paid in servicing the domestic debt of the Federal Government was spread throughout the 12 months of the year.
A principal value of N25 billion of Treasury Bonds was also repaid in the review period.
The statistics shows that between 2015 and 2016, the cost of serving the Federal Government’s domestic debt rose by N208.76 billion.
The DMO attributed the increasing cost of debt servicing to an equally increasing domestic debt profile and rising interest rate.
The report stated, “The FGN’s domestic debt service as of end of December 2015 amounted to N1.02tn compared to N865.81bn in the corresponding period of 2014, and representing an increase of N152.32bn or 17.59 per cent.
“This amount comprised principal repayment of N25bn and interest payment of N993.13bn. By instrument type, FGN bonds debt service accounted for 62.41 per cent of the total debt service payment, while payments in respect of the Nigerian Treasury Bills and Treasury Bonds were 31.83 and 5.76 per cent, respectively.
“The trend analysis shows a continued rise in FGN’s domestic debt service payments from 2011 to 2015, which was attributed to the increase in domestic debt stock, as well as the higher interest rates, which led to the rise in the cost of borrowing in the domestic debt market.” The Office explained.