The Debt Management Office (DMO) yesterday set a maximum limit of $6.25 billion (about N1.906 trillion) borrowing for the Federal Government this fiscal year.
The Office, in its 2017 Report of the Annual National Debt Sustainability Analysis report published on Wednesday stated that the $6.25 billion was proposed to be sourced from both the domestic and external creditors.
Specifically, the DMO sets the domestic borrowing limit at $3.125 billion (about N953.18 billion), the same as the external borrowing component.
According to the report, the proposed new limit will enable the Federal Government to mobilise additional resources to fund investment projects required to stimulate the nations’ economic growth in line with the aspirations of the Economic and Recovery Growth Plan (ERGP) without adversely affecting the country’s debt sustainability.
The DMO reported: “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.
The Office stated further that the recommended limits, majorly determined by the size of the GDP, would provide a guide to government’s borrowing activities for the year without altering the country’s self-imposed debt limit.
The Director-General of the Office, Patience Oniha, explained that the DMO’s expectation to consolidate on its achievements in 2017 informed the latest measure 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.
The DMO, which also raised N66.9 billion at the FGN Bond Auction yesterday, stated that the bond auction was 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 enable investors have the opportunity to make choice of their preferred tenors.
The Office stated that investors showed a strong preference for the 10-year bond with a total subscription of N50.51 billion, compared to the N40 billion that was offered.
“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”, the DMO stated.
