Debt will only hit N77trn if N22.7trn ways and means is included, says DMO

The Debt Management Office (DMO) has explained that public debt would only hit the projected N77 trillion if the ways and means advances from the Central Bank of Nigeria (CBN) are included.

On Wednesday, the agency said the incoming administration would inherit about N77 trillion as debt by the time President Muhammadu Buhari’s tenure ends in May.

The estimate was made during the public presentation and breakdown of the 2023 appropriation act and the plans of the federal government to finance the budget deficit.

Following the public outburst that trailed the projection, in a statement on Thursday, Patience Oniha, director-general, DMO, said the figure would only reach that level when the ways and means advances from the CBN were securitised.

Securitisation is the practice of pooling together various types of debt instruments and selling them as bonds to investors.

According to Oniha, the securitisation of the ways and means advances will enable the agency to include the debt in the public debt stock, thereby, improving debt transparency.

Oniha explained the projected debt using the actual public debt stock of N44 trillion as a basis.

She said the total debt stock included external and domestic debts of the federal government, the 36 state governments and the federal capital territory (FCT).

“Taking into account a number of ongoing activities, the total public debt stock; that is the external and domestic debts of the federal government, the 36 state governments and the FCT would be about N77 trillion,” she said.

“The debts that will be added to the public debt data in 2023 include the N1 trillion ways and means advances to finance the supplementary budget.

“This has already been approved by the national assembly.

“It also includes N22.72 trillion ways and means advances currently under consideration by the national assembly.

“The projected debt stock for May, 2023, also includes N5.567 trillion, representing about 50 percent of the new borrowing of N11.134 trillion in the 2023 appropriation act.

“It also includes new promissory notes estimated at N1.5 trillion to be issued to settle arrears of the FGN and judgment debts.”

According to Oniha, also included are estimates for new borrowings by state governments and the FCT.

“From these figures, it is clear that the ways and means advances of N22.72 trillion, which represents funds already spent, is the largest source of the increase,” she added.