By Etuka Sunday
The Debt Management Office (DMO) has disclosed the plans of the Federal Government to issue N150billion Sukuk bond for the construction of 44 roads across the states of federation.
Director-General, DMO, Patience Oniha who stated this in Abuja while unveiling the DMO’s plans for the year 2020, based on the New Borrowings in the 2020 Appropriation Acts, which comprises of N850 billon and N744.99 billion for External and Domestic Borrowings respectively.
She said, the New Domestic Borrowings will be raised through FGN Bonds, Sukuk, FGN savings Bonds and possibly Green Bonds.
While the for External Borrowings, the strategy was to first seek out concessionary and semi concessionary loans due to the lower interest rate and longer tenors.
Any shortfall thereafter may be raised from commercial sources, she said.
Amongst the highlights of the DMO’s achievements for 2019, according to her, was the issuance of a 30-year FGN Bond for the first time.
She said, “the introduction of the 30-year Bond was to meet the investment needs of long-term investors such as insurance companies and support the development of the domestic financial markets in areas such as mortgages.
“From the FGN perspective the 30-year Bond also contributed to reducing the refinancing risks of the Public Debt Stock.
“The product has enjoyed a strong demand as N284.391 billion had been issued by the end of September 2019.
“The Ratio of Domestic Debt to External Debt at 69:31 as at September 2019 was an improvement over the Ratio of 71:29 as at September 2018 compared to the target of 60:40 in the Medium-Term Debt Management Strategy.
“The Ratio of Long Term to Short Term Debt in the Domestic Debt as at September 2019 was 80:20, which shows that the target of 75:25 had been outperformed by September 2019.
“Furthermore, it was an improvement over the Ratio of 73:23 recorded in September 2018.
“Similarly, Total Debt as a percentage of GDP was 18.47% as at September 2019 was well within the limit of 25% and fares better in comparison with the Debt/GDP ratios of countries such as the United States of America, United Kingdom and Canada with ratios of 105%, 85% and 90% respectively for the same period.
“However, because they generate adequate revenues, their Debt Service/Revenue Ratios for the same period were much lower at 12.5%, 7.5% and 7.5% respectively when compared to Nigeria’s 51% in 2017
“The low revenue base of Nigeria relative to its GDP is clearly reflected in the high Debt Service to Revenue Ratio. This clearly brings to fore, the need for revenues to grow.
“The efforts towards increasing and diversifying revenue such as the passage of the Finance Act and Strategic Revenue Growth Initiative of the Federal Ministry of Finance, Budget and National Planning should thus be supported,” she said.