Weekly Economic And Financial Commentary – September 14, 2020

Data published by the Debt Management Office (DMO) last week showed Nigeria’s total public debt stock rose to $85.9 billion in Q2 2020 from $79.3 billion at the end of Q1 2020. Compared to the level at the end of 2019 of $84.1 billion, the debt stock rose 2.2% year to date. The increase from Q1 to Q2 emanated from both external and domestic debt. External and domestic debt rose by $3.8 billion and $2.8 billion to $31.5 billion and $54.4 billion respectively. With the DMO adopting same exchange rate of N361/$1 in Q1 and Q2, we note that the increase in the debt stock largely reflects actual external and domestic borrowings in a bid to augment the large fiscal deficit occasioned by the Covid-19 disruption to main revenue sources. The composition of external debt increased by 176bps to 36.7%, which is still far below the optimal debt composition of 60:40 for domestic and external debt as outlined in the 2016-2019 debt management strategy. However, when compared to 2015 (84:16) wherein the strategy was initiated, the strategy recorded significant progress. In terms of debt servicing, total domestic debt service rose 46% YoY to N312.8 billion, while external debt service increased 14% YoY to $287 million. Commercial loans (Eurobonds and Diaspora bods) accounted for 55% of the external debt service, followed by multilateral loans at 33%, Oil Warrant at 7% and bilateral loan at 5%.