By Bashir Olanrewaju
The Nigerian government increased the size of debt it could contract to 40 percent of gross domestic product from the previous 25 percent, according to the Debt Management Office (DMO).
The new plan approved by the cabinet on Wednesday as part of the 2021-22 medium-term debt management strategy, will keep domestic debt at a maximum of 70 percent of the debt portfolio, with foreign borrowing not exceeding 30 percent, the DMO said in a statement on its website.
“Borrowing will be from domestic and external sources but a larger proportion of new borrowing will be from domestic sources using long-term instruments, while for external borrowing, concessional funding from multilateral and bilateral sources will be prioritised,” the debt agency said.
Additional funds raised from the higher debt ceiling will by used to address budget deficits, promissory notes and borrowings from the central bank known as way and means advances, according to the DMO.
President Muhammadu Buhari’s government has relied more on raising debt to fill a revenue gap created by declining oil revenue since 2015, a situation made worse by the coronavirus pandemic.
Nigeria total public debt stood at 85 billion dollars as at last September, according to DMO data. Of this sum 62 percent was domestic debt.