DMO limits FG borrowing to N1.9tn this year
The Debt Management Office has set the maximum limit of $6.25bn (N1.906tn) for the Federal Government’s borrowing in the 2018 fiscal year.
The DMO, in the 2017 Report of the Annual National Debt Sustainability Analysis released on Wednesday, said the $6.25bn was proposed to be sourced equally from the domestic and external sources.
It stated that the new domestic borrowing would be $3.125bn (equivalent of about N953.18bn), while external borrowing would be $3.125bn, (about N953.18bn).
According to the report, the proposed new limit will afford the government an ample room to mobilise additional resources to fund investment projects that will facilitate the turnaround of the economy, in line with the aspirations of the Economic and Recovery Growth Plan, without jeopardising the country’s debt sustainability.
The report read in part, “In order to estimate the borrowing limit for 2018, it requires the determination of the difference between the proposed country-specific threshold of 25 per cent and the end-period total public debt-to-Gross Domestic Product ratio for 2017 for the federation, projected at 19.80 per cent.
“Therefore, the fiscal borrowing space left for the three-year period is 5.2 per cent, and based on the projected 2018 GDP of $360.6bn, the quantum of borrowing for 2018 will be 1.73 per cent of $360.6bn, which translates to $6.25bn.”
It added that the recommended limits, majorly determined by the size of the GDP, would provide a guide to government’s borrowing activities for 2018, which would prevent the breach of the self-imposed debt limit.
The Director-General, DMO, Patience Oniha, said the DMO’s expectation to build on its achievements in 2017 influenced the plans to introduce a new strategic plan that would ensure the proper alignment of its activities and products with the Federal Government’s needs and agenda, as articulated in the ERGP.
Meanwhile, the DMO raised N66.9bn at the FGN Bond Auction on July 25.
The DMO, in a statement on Wednesday, described the bond auction as part of the capital raising for the 2018 budget.
According to the statement, the DMO offered FGN bonds at the auction in three tenors of five, seven and 10 years to give its diverse investor base an opportunity to choose their preferred tenors.
It said investors showed a strong preference for the 10-year bond with a total subscription of N50.51bn, compared to the N40bn that was offered.
It stated, “The FGN Bonds at the auction were allotted at 13.69 per cent for the five-year, 14 per cent for the seven-year and 14.2999 per cent for the 10-year bond.”