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DMO links rising debt stock to exchange rate, fresh borrowing - THE NATION
The Debt Management Office (DMO) has clarified the factors contributing to the recent increase in Nigeria’s debt stock, attributing the rise primarily to approved new borrowings and changes in the naira exchange rate.
In a statement obtained yesterday, the DMO noted that the debt growth resulted from authorised new external and domestic borrowing, alongside the securitisation of the Ways and Means Advances.
These measures the DMO said, have been implemented to attract foreign exchange inflows, which are expected to bolster external reserves and support the naira exchange rate.
The DMO addressed the trend in total debt data between the fourth quarter of 2023 (Q4 2023) and the first quarter of 2024 (Q1 2024), noting that the increase of N24.33 trillion in naira terms has been misinterpreted as new borrowing. The actual new borrowing comprises: N2.81 trillion as part of the new domestic borrowing of N6.06 trillion provided in the 2024 Appropriation Act and N4.90 trillion as part of the securitization of the N7.3 trillion Ways and Means Advances approved by the National Assembly.
Additionally, the official naira exchange rate depreciation from USD/N899.39 in Q4 2023 to USD/N1,330.26 in Q1 2024 significantly impacted the debt stock valuation in naira terms.
