Presentation on Nigeria - World Bankpubdocs.worldbank.org/en/760311510171464524/forum... ·...
Transcript of Presentation on Nigeria - World Bankpubdocs.worldbank.org/en/760311510171464524/forum... ·...
Presentation on Nigeria
by
Abraham . E. NwankwoDirector-General
Debt Management Office, Nigeria
DEBT MANAGEMENT OFFICENIGERIA
I. Background of the Economy
Structure of GDP (2015) *
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Background of the Economy cont’d
Contribution of Oil & Gas To GDP: 14% To Export Earnings: ˃ 90% To Public Revenue: ˃ 80% To Employment: 0.01% (2013, NBS Q4, Survey)
Drastic Structural Collapse in Price of & Revenue from Oil From average of USD110 per barrel between 2010 and mid-
2014 to ˂ USD30 per barrel in Q1, 2016 Direct and indirect drop in public revenue: about USD20 billion
per annum
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Background of the Economy cont’d
Stabilization Measures: For Subnationals (States): Restructuring of their bank loans
into 20-year bonds.
Intensive and extensive tax collection − existing tax/GDP
ratio of about 6% contrasts with peer group average of
about 18%.
Efficiency in Expenditure: cost-reduction, leakage blockage;
use of computerized payroll and accounting systems to
maximize inflows and minimize outflows
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II. Debt Management
Total Public Debt (June 30, 2016): Amount: USD61.4 billion
− External: 11.3 billion (18%)
− Domestic: 50.1 billion (82%)
Debt/GDP ratio: 12.25%
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Debt Management con’dDEBT MANAGEMENT OFFICENIGERIA
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(a) (b) (c) (d)
External Debt Stock
as Percentage of
Total Debt Stock
(%)
External Debt
Stock/GDP
Ratio
(%)
External Debt
Stock/Export
Ratio
(%)
External Debt
Service/Export
Ratio
(%)
2006 20.43 4.28 15.79 20.05
2011 13.64 3.10 8.40 0.50
June, 2016 18.33 2.24 23.37 0.74
Applicable Limit 40.00* 40.00 150.00 20.00
Year
NIGERIA: EXTERNAL DEBT RATIOS AFTER PARIS & LONDON CLUB DEBTS EXITS
*Established in Nigeria’s Debt Management Strategy, 2016-2019
Debt Management con’dDEBT MANAGEMENT OFFICE
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Multilateral Bilateral Commercial
% of Total % of Total % of Total
2006 73.59 9.20 17.21
2011 80.63 8.01 11.36
June, 2016 70.96 15.72 13.32
Average Interest Rate 0.75 2.50 5.75
Tenor Range 25 - 40 yrs 12 - 25 yrs 10 - 12 yrs
Note: From the preceding 2 Tables, Nigeria's external debt is of investment grade
Year
NIGERIA: EXTERNAL DEBT CATEGORIES AFTER PARIS & LONDON CLUB DEBTS EXIT
Debt Management con’dDEBT MANAGEMENT OFFICE
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NIGERIA: COMPOSITION OF PUBLIC DEBT AFTER PARIS & LONDON CLUB DEBTS EXITS
Year
External Debt Stock as Percentage of Total
Debt Stock
Domestic Debt Stock as Percentage of Total
Debt Stock
Total Public Debt in USD (Million)
Debt/GDP Ratio
2006 20.43 79.57 17,349.69 14.18
2011 13.64 86.36 41,549.44 17.45
June, 2016 18.33 81.67 61,447.01 12.25
Debt Management con’dDEBT MANAGEMENT OFFICENIGERIA
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Debt Management con’d
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Nigeria’s Eurobond Jan. 2016 Sept. 2016
5.125% US$500M
JUL 2018
7.304% 4.517%
6.75% US$500M
JAN 2021
8.596% 6.454%
6.375% S$500M
JUL 2023
8.680% 6.607%
Debt Management con’d
Change in Foreign Participation in the Domestic Bond Market
virtually no impact on subscription − local investors guarantee
oversubscription
Addressing the Shocks
a deep and reliable (though costly) domestic bond market
plan: to refinance maturing domestic debts with long term externaldebts − to reduce debt service cost for the sovereign and reducepressure in the domestic market to favour the private sector
Average cost of debts substantially lower for external debt comparedto domestic debt
High domestic interest rates: Solution – medium to long termstructural changes
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Debt Management con’d
High Domestic Debt service to Revenue Ratio: Solution − exploit space contained in low tax/GDP ratio of ˂ 6% compared to peer group of 18%
Even with commodity price and forex revenue crisis, the strategy is still to borrow substantially and strategically:
to continue the existing pursuit of closing huge infrastructure deficit
to help spend the economy out of recession for inclusive and sustainable growth:
− infrastructure competitiveness diversified export earnings
strengthening of reserves & exchange rate
Elements of Nigeria’s Debt Management Strategy (2016 – 2019)
Change:
From External: Domestic = 19:81
To External: Domestic = 40:60
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THANK YOU
13
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