Close Menu
    Facebook X (Twitter) Instagram
    Facebook X (Twitter) Instagram
    SweetCrudeReportsSweetCrudeReports
    Subscribe
    • Home
    • Oil
    • Gas
    • Power
    • Solid Minerals
    • Labour
    • Financing
    • Freight
    • Community Development
    • E-Editions
    SweetCrudeReportsSweetCrudeReports
    Home » How oil price decline may affect Nigeria’s debt repayment plan

    How oil price decline may affect Nigeria’s debt repayment plan

    August 5, 2013
    Share
    Facebook Twitter LinkedIn WhatsApp

    Dr. Ngozi Okonjo Iweala05 August 2013, Lagos Nigeria’s debt situation will remain vulnerable to any unexpected large drop in oil prices, a report has said.

    The report also pointed out that Nigeria’s debt would remain susceptible to other macroeconomic shocks, even as it urged the federal government to properly manage the situation.

    The Ecobank Group gave this warning in a report titled: “Nigeria – Our Insight.”

    Disturbed by Nigeria’s rising debt profile, the House of Representatives recently gave its House Committee on Aid, Loans and Debt Management a mandate to investigate what it called the “rising incidence of domestic public debts” owed local contractors across the country, which it said had so far risen above N6 trillion.

    The mandate was given following a motion moved by the chairman of the committee Hon. Adeyinka Ajayi while presenting the findings of the committee on the subject matter.

    Ajayi had said over N500 billion was being used annually to service domestic debts, adding that the House frowned on that as part of its oversight functions.

    According to him, the domestic debt profile began to soar since the country exited the Paris Club debt in 2006, adding that, “the structured domestic debt profile of the nation stood at N6.1 trillion, while foreign debt stood at $6.7 billion or N1 trillion naira as at March 2013”.

    Beside this, Nigeria’s external debt has also been on the rise in recent times.
    To this end, the Ecobank report pointed out that: “Nigeria’s debt situation will remain vulnerable to any unexpected large drop in oil prices or other macroeconomic shock to the economy; this could lead to renewed debt distress.

    “This factor will continue to weigh on the country’s sovereign credit rating. Amid this and other factors, Nigeria’s sovereign foreign currency long-term credit ratings remain below investment grade, albeit with a stable outlook.”

    But it noted that the outlook for Nigeria’s ratings compared more favourably than that of South Africa, which has a negative outlook.

    “Amid growing efforts to reduce external financing risk, federal government’s domestic debt has emerged as the bigger share of total debt, reflecting increased efforts by the federal government to finance a larger proportion of its deficit from the domestic capital market rather than from international creditors.

    “Federal government domestic debt has risen from $10.4 billion (11.7% of GDP) in 2004 to $43.4 billion (16.6% of GDP) in 2012. The stock of domestic debt is likely to remain much higher than external debt, although the government’s recent effort to exercise fiscal prudence should see domestic borrowing fall, remaining well below the federal government’s target of 30 per cent of GDP.

    “Already, growth in domestic debt has slowed to 21.7 per cent, down from 40 per cent in 2010. However, despite the downward trajectory in domestic debt, debt-servicing costs remain high (amounting to $4.4 billion; nearly two per cent of GDP in 2012), reducing the fiscal space for investment in otherwise core areas of priority,” it added.

    Continuing, the report said the move by the federal government to set aside N100 billion to be used to retire domestic debt would help the country, adding that plans to reduce the bloated civil service wage bill, alongside falling bond yields, would also go a long way in reducing domestic borrowing costs.

    – This Day

    Related News

    Natasha urges Nigeria to tap US trade opportunities beyond oil

    Nigeria reaffirms commitment to innovative border management

    Nigeria rallies economic team to counter US 14% tariff threat

    E-book
    Resilience Exhibition

    Latest News

    Nigeria’s oil output to soar as FG, PINL intervention unlocks 200,000bpd in Ogoni 

    June 2, 2025

    Africa has 30% of global minerals, yet stuck in poverty – Obi

    June 2, 2025

    Natasha urges Nigeria to tap US trade opportunities beyond oil

    June 2, 2025

    APPO Secretary General joins AOG 2025 ahead of Energy Bank launch

    June 2, 2025

    Oil gains ground as Russia-Ukraine tensions stir supply concerns

    June 2, 2025
    Demo
    Facebook X (Twitter) Instagram
    • Opec Daily Basket
    • Oil
    • Power
    • Gas
    • Freight
    • Financing
    • Labour
    • Technology
    • Solid Mineral
    • Conferences/Seminars
    • Community Development
    • Nigerian Content Initiative
    • Niger-Delta Question
    • Insurance
    • Other News
    • Focus
    • Feedback
    • Hanging Out With Markson

    Subscribe for Updates

    Get the latest energy news from Sweetcrudereports.

    Please wait...
    Please enter all required fields Click to hide
    Correct invalid entries Click to hide
    © 2025 Sweetcrudereports.
    • About Us
    • Advertise with us
    • Privacy Policy

    Type above and press Enter to search. Press Esc to cancel.