According to the Debt Management Office (DMO), the outstanding public debt declined by 5.65 percent from $84 billion to $79.3 billion between December 2019 and March 20201. The reduction was driven by a 9 percent decline in domestic debt from $56.4 billion to $51.6 billion during the same period2. Meanwhile, the change to external debt was minimal as it tapered around $27.6 billion in both periods. While the decline in domestic debt is as a result of the redemption of Nigeria Treasury Bills (NTBs), the stagnation of external debt stems from the government’s need to limit its exposure to exchange rate volatility. However, the $3.4 billion in emergency support received from the IMF in April as well as the reliance on domestic debt to mitigate the impact of the pandemic will increase public debt in the near term. In this context, effective debt management is important not only with regards to the terms of borrowing but also in debt use and transparency.
July 20, 2020
Nigeria Economic Update (Issue 27)
Recent data from the National Bureau of Statistics (NBS) show that total capital importation in 2015 fell steeply by 53.5 per cent from $20,750.76 million in 2014 to $9,643.01 million in 20152. This decline was largely driven by a substantial drop in portfolio investment (the largest component of Capital Inflows), which fell by 59.74 percent. The exclusion of Nigeria from the JP Morgan EM Bond index, the slump in crude oil prices, the decision of the US Federal Reserve to raise interest rates and the capital control measures imposed by the Central Bank of Nigeria (CBN) are the notable drivers of the reduced inflow of capital. Going forward, improving the business environment, especially easing foreign exchange controls, would determine the extent to which the economy can attract increased capital inflows.
Recently released inflation rate report by the NBS shows a further decline in consumer price index in December 2017. At 15.37 percent, the CPI was 0.53 percentage points lower than the 15.90 percent recorded in November 2017. The food sub-index decreased to 19.42 percent from 20.21 percent, indicating reduced pressure on food prices in the review period. Core sub-index fell slightly to 12.1 percent from 12.21 percent in the preceding month. Going forward, the ability of the Central Bank of Nigeria (CBN) to control inflation in 2018 may be hampered by monetary injections by the government and politicians towards budgetary expenditure and election campaigns, respectively.