The Debt Management Office (DMO) on Friday said the Nigerian government was considering taking a loan from foreign sources to fund the 2020 budget signed into law by President Muhammadu Buhari a month ago.
On December 17, 2019, Mr. Buhari, who traveled to the United Kingdom for an investment summit starting next Monday, signed the 2020 Appropriation Bill into law. His government proposed to spend N10.33 trillion in this fiscal year, which kicked off on January 1.
In a chat with newsmen on Friday, the Director General of DMO, Ms. Patience Oniha, said the President Buhari administration was planning new borrowings of N1.60 trillion, with N850 billion (about $2.8 billion at an exchange rate of N306/$1) and N744.99 billion for external and domestic loans respectively.
She noted that the foreign loans would come mainly from concessionary and semi concessionary sources due to the lower interest rate and longer tenors, adding that, “Any shortfall thereafter may be raised from commercial sources.”
The debt office noted that in the 2019 budget, a provision was made for external borrowing of N802.82 ($2.62 billion), but this was never pursued due to the late passage of the appropriation act.
“The 2019 Appropriation Act provided for a total new borrowing of N1.61 trillion split equally between domestic and external, only the domestic component of N802.82 billion was raised due to the late passage of the 2019 Appropriation Act and the expectation that the implementation of the 2020 budget would commence on January 1, 2020,” the DMO said.
However, there are indications that external borrowing will be done.
The debt office also said last year, the ratio of domestic debt to external debt stood at 69:31 as of September 2019, an improvement over the 71:29 as of September 2018 compared with the target of 60:40 in the Medium-Term Debt Management Strategy.
It also said the ratio of long term to short term debt in the domestic debt as of September 2019 was 80:20, which shows that the target of 75:25 had been outperformed by September 2019, an improvement over the ratio of 73:23 recorded in September 2018.