Press Briefing By The Minister Of Finance, Dr Olusegun Aganga On November 29, 2010.
OPENING REMARKS: PROTOCOL AND BACKGROUND
Gentlemen of the Press, I welcome you all to the 2010 Press Briefing on the activities of the Federal Ministry of Finance, its Parastatals and Agencies. I would like to take this opportunity to commend my colleague, the Honourable Minister of Information and Communications, Professor Dora Akunyili, for the supportive role she has played in facilitating this event.2. Over several months since my appointment as the Minister of Finance in April this year, I have vigorously pursued the vision of the Administration of His Excellency, the President of the Federal Republic of Nigeria, Dr. Goodluck Ebele Jonathan, which is to rebuild the Nigerian economy on a new and stronger foundation. In order to achieve this objective, the National Economic Management Team (NEMT) was reconstituted and I was appointed the Chairman. As you are all well aware, the NEMT consists of members drawn from key economic Ministries, Departments and Agencies of the Federal Government that work together as a single body to drive the execution Government’s agenda on enhanced economic performance for the country.
3. Since my appointment, I have on numerous occasions highlighted the agenda of this Government and the Ministry with regards to the economy on the domestic and international stage. However, this Ministerial Press Briefing offers the opportunity to acquaint the Nigerian public on our Economic Growth Strategy, the reform efforts and activities of my Ministry, Parastatals and Agencies as well as the activities of the NEMT.
4. The last six months have been an interesting and exciting period. On a personal level, my belief in the wonderful destiny of Nigeria has been reaffirmed. As many of you will know, I have a private sector background with a specialisation in international finance and capital market. I know this as a fact – Nigeria’s potential is universally acknowledged and unquestioned. Our country is a member of the group of countries known as the N-11 (Next eleven), that are expected to rival some of today’s most advanced economies within the next decade. The world is waiting for Nigeria to deliver on its promise, its people are waiting and have waited long enough. The President and his Government have entered into a pact with the Nigerian people, one that says we are now moving from promise to action. You will not be disappointed; you will not be let down.
5. To the best of my ability, I will articulate what our plans are, why we are taking these actions, what we have done to date and what we are yet to accomplish. The core message, distinguished ladies and gentlemen, is that we have in place an Economic Growth Strategy that has been developed and is being executed by the NEMT under my leadership. The Economic Growth Strategy aims to rebuild and grow Nigeria’s economy on a sustainable and structurally sound footing, recognising our potential, strengths and our unique challenges. Importantly, this plan targets a double-digit economic growth rate in the short to medium term that will place Nigeria in the top tier of emerging economies within the next decade.
6. Before I go into more detail on our plans, it is important to note that the progress we have made to date has been encouraging. The backdrop is well known, our economy has been emerging from the adverse impact of the global financial crisis and the structural challenges of the last several years. In particular, Nigerians have continued to feel the negative effects of the crisis in financial sector and capital markets. We intervened in the banking sector to inject liquidity and capital into several banks to prevent a failure of the financial system and the forestalling accompanying adverse effects on the economy. The capital markets and stock exchange which have traditionally been an engine of growth and a source of capital for our companies and enterprises suffered a dramatic loss of confidence due to weak oversight and regulation. With the Securities and Exchange Commission (SEC), we have worked extremely hard to reverse this in order to restore discipline and confidence to our capital markets.
7. Despite the global economic crisis, Nigeria has experienced phenomenal economic growth compared to economic performance in emerging and advanced economies. Nigeria is projected by the National Bureau of Statistics to grow by 7.85% in 2010, having achieved 7.6% growth by the third quarter of this year. In 2009, our economy grew by 6.7% against a contraction of the global economy of 0.8%, a contraction of advanced economies of 3.2% and an expansion by emerging & developing economies of 2.1%. This impressive growth rate is being achieved despite the twin constraints of limited power supply and critical infrastructure gaps. However, Nigerians need to reconcile this level of growth with the current level of unemployment. We have taken up the challenge in line with the transformational agenda of Mr President centred on building an inclusive society with a big reduction in the level of unemployment and the alleviation of poverty.
8. I applaud the creativity and resilience of the Nigerian people, which continues to hold fast. This perseverance and creativity is one of our greatest strengths and we must continue to harness it. We are making plans to enhance the productivity and competitiveness of our economy.
9. Again, our duty as an Administration, as a Government, is to harness the Nigerian spirit of innovation and productivity in order to create jobs, raise incomes, create broad-based and sustained economic growth and build an inclusive society.
ACTIVITIES OF THE NATIONAL ECONOMIC MANAGEMENT TEAM (NEMT)
THE ECONOMIC GROWTH STRATEGY
10. The National Economic Management Team (NEMT), was reconstituted upon my appointment as the Honourable Minister of Finance. I am its chairman and my Ministry serves as its Secretariat. The focus of the NEMT has been the development of an Economic Growth Strategy aimed at enhancing a sustained macroeconomy, diversified economic base, ensuring inclusive growth with job creation, enhancing productivity and improving the business climate.
11. There are 4 pillars underlying the strategy. The first is the sourcing and allocation of capital to the real sector and infrastructure, the second is inclusive growth & job creation, the third is the removal of barriers to enhanced productivity and the final pillar is the improvement of the business climate and governance. All of these pillars are closely linked, self-reinforcing and driving one another.
12. Sourcing and Allocation of Capital: Our aim is to stimulate the real sector of the economy and reduce infrastructure deficit through increased access to cheap and long-term capital. These efforts can be sub-divided into two broad categories: domestic and international initiatives. Under the former, our plan is to:
i. Establish a Nigerian Sovereign Wealth Fund (NSWF) to catalyse co-investment from domestic and international investors into Nigerian economy. The National Economic Council (NEC), after extensive consultation, has approved the establishment of the Nigerian Sovereign Investment Authority (NSIA) and has set aside US$1 billion as seed capital for the Authority. The NEC, during its meeting of November 25th 2010, approved the NSIA bill and directed that the bill be forwarded to the National Assembly through the Federal Executive Council (FEC).
ii. Ensure the effective operation of the Asset Management Company of Nigeria (AMCON). The Board for AMCON has been constituted, MD appointed and the Administration has commenced operation.
iii. Strengthen the Nigerian Stock Exchange and the Capital Market. In addition to these strategic initiatives, we are placing emphasis on improving the legal environment for contract enforcement. In this regard, we are working with the Ministry of Justice to amend the Bankruptcy Act, Land-use Act and Evidence Act and make them more creditor-friendly. This will no doubt increase the willingness of banks to extend credit to the real sector.
13. Efforts are being made to refocus and support the Nigerian Development Financial Institutions (DFIs) for enhanced performance to better support the real and productive sector of the economy. We are also examining ways of utilizing the idle capital under the Pension Scheme for the development of the real sector without violating the extant laws.
14. The international initiatives include the issuance by the Government of a US$500 million benchmark Eurobond into the international capital markets, not for the purpose of funding the budget but to become a benchmark against which domestic firms can raise capital in the international capital markets as well as become a risk pricing indicator for international investors.
15. An investor relations unit is being established within the Ministry to liaise with international credit rating agencies and investors. The unit will be responsible for the management of Nigeria’s sovereign credit ratings as well as handling information requests from domestic and international investors.
16. We are also establishing a Sovereign Risk Management Unit within the Ministry with the support of the World Bank. This Unit will be responsible for the monitoring and management of fiscal, economic and financial risks that Nigeria runs with respect to its sovereign balance sheet and budget. One of the key tasks of this Unit will be to assess the ability of Nigeria to provide guarantees for critical infrastructure projects in order to catalyse the required financing for the projects from the private sector by factoring in the limitations of the Government’s own finances.
17. Inclusive Growth and Job Creation: This is with a view to fostering economic growth and job creation by providing opportunities for economic and human development. As I said before, we have to build an inclusive society. The vision of the Government is that the man on the street should feel and recognise the positive impact of Nigeria’s high growth environment. Our task is to ensure that employment increases in line with the level of economic growth.
18. The NEMT has targeted labour intensive sectors such as agriculture, housing and manufacturing, Sports and Entertainment industries. Agriculture, as the largest contributor to the real Gross Domestic Product (GDP) and a major source of employment, is a key area of focus. Efforts are being directed at commercialising agriculture and evolving from primary or subsistence farming into larger-scale production.
19. A Job Creation Committee chaired by the prominent businessman, Aliko Dangote, was inaugurated to develop an action plan for the creation of jobs. This Committee has submitted its report and steps are now being taken to implement the recommendations included in the report.
20. We are working with the Lagos Business School to create an Enterprise Development Programme to equip entrepreneurs with the necessary skills to develop their businesses and more easily access finance. The plan is to develop training programmes for trainers at 24 proposed Enterprise Development Centres nationwide.
21. A Growth and Employment Pact (GEP) was organised in conjunction with the World Bank to bring stakeholders in the different sectors of the economy such as construction, ICT, entertainment, tourism and meat & leather together with decision makers in the public sector to create an action plan aimed at boosting employment and promoting economic growth in these sectors.
22. Removing Barriers to Enhanced Productivity: Our key activities here are the reduction of the infrastructure deficit including the improvement in power supply. The infrastructure deficit, especially the lack of stable and adequate power supply and insufficient transport infrastructure, is a significant barrier to economic growth. The delivery of power is underpinned by actions to implement the Roadmap for Power Sector Reform that was unveiled by the President in August 2010.
23. The Federal Ministry of Finance is supporting the initiatives on power by working with the World Bank to provide partial risk guarantees needed to encourage private sector investment in power generation.
24. In addition, the Infrastructure Concession Regulatory Commission (ICRC) has led an Infrastructure Technical Working Group composed of stakeholders in the public and private sectors to produce a Roadmap for investment in Nigeria’s critical infrastructure. The Roadmap has identified 50 priority projects that need to be executed in order to boost productivity. Appropriate sources of funding for the projects have also been identified.
25. Improving the Business Climate and Governance: This aims to improve Nigeria’s competitiveness and strengthen the environment for doing business. The purpose is to implement a set of policies that will enhance the attractiveness of Nigeria as a place to do business. It involves the development of a National Tax Policy by the Ministry with an enhanced emphasis on the simplification and modernisation of tax administration through the Federal Inland Revenue Service (FIRS). The Tax Policy will soon be launched and this will assist the FIRS.
26. In the area of customs administration reform, we are reviewing progress towards achieving 48-hours cargo clearance by streamlining clearance procedures. We have continued to engage stakeholders on the issue of the business environment and how the Government can assist. We have also taken measures to promote and protect our local industries through a review of the Import Prohibition List and Tariff Structure.
27. In November 2010, we took action to directly tackle the issue of Nigeria’s competitiveness ranking by inviting the World Economic Forum (WEF) who compiles the rankings to a working session to sensitise both the public and private sectors on the issues affecting Nigeria’s ranking and how they can be addressed. A National Competitiveness Council is to be established to create and implement an action plan for improving Nigeria’s competitiveness and liaise with Councils in other countries on global competitiveness issues.
28. We are also in the process of establishing special Commercial Courts in order to expedite the resolution of commercial disputes which will contribute to the enhancement and efficiency of doing business in Nigeria.
29. You will recall that the Federal Government created a N10 billion revolving fund with the Urban Development Bank for the procurement of Mass Transit Buses (MTB) for the populace. Mr President launched the first set of 500 buses during the 50th independence anniversary in 2010. More of such buses will be procured in the coming year.
30. The National Insurance Commission’s (NAICOM) Code of Good Corporate Governance has been closely monitored to ensure full compliance by all operators as well as the full execution of the Market Development and Restructuring Initiatives (MDRI) which is aimed at enforcing compulsory insurance in the country.
31. To ensure prompt payment of claims, the Commission’s Public Complaint Bureau, set up exclusively to handle non-payment of claims by the insuring public, during the current year handled a total of 110 cases involving 546 companies while N966, 318,046.88 was paid as claims as a result of this intervention.
ACTIVITIES OF THE FEDERAL MINISTRY OF FINANCE
32. I believe that to some extent, you are ALL familiar with the specific functions of the Federal Ministry of Finance and the institutions that report to the Ministry. To be clear, the functions are as follows:
To maintain efficient and effective management of the Nation’s finances, in terms of efficient revenue generation and management, as well as prudent expenditure management;
To ensure macroeconomic stability;
To harmonise fiscal and monetary policies to ensure their effectiveness as macroeconomic stabilisation measures;
To ensure the effective regulation and development of the capital markets necessary to drive the needed investment capital for the economy;
To ensure proper maintenance of the public accounts and enforcement of compliance with financial rules and regulations as well as monitoring the accounts of the Ministries, Departments and Agencies (MDAs) for purposes of transparency, accountability and efficient service delivery;
To anchor the mobilisation of external (bilateral and multilateral) resources to bridge the domestic resource gap and accelerate economic development; and
To ensure effective management of the Nation’s external and domestic debts.
33. In the performance of these functions of achieving the overall objective of macroeconomic stability and enhanced economic growth and development, it has been important to execute several fiscal, budgetary and institutional reforms. It is essential that we protect, diversify and maximise the Nation’s revenue base. Therefore we have put in place certain interventions to improve revenue performance and block leakages. These actions include:
Process audits of all revenue generating agencies, including the Nigerian Customs Service (NCS) and the FIRS to ensure the full remittance of revenues to the Federation Account. These audits are in progress and final reports are expected soon.
A forensic and process audit of the Nigerian National Petroleum Corporation (NNPC);
Deepening of customs and tax administration reforms; and
Strengthening of the pre-inspection process for crude oil and the extension of the inspection process to gas.
34. In addition, we want to ensure that Nigerians and the Government obtain value for money in every transaction and every contract. In this respect, we must improve the efficiency and quality of our capital and recurrent outlays so that we see results for every dollar or naira that we spend. We are working with our development partners to adopt a performance-based budgeting system that will ensure a shift from hitherto resource commitments to the MDAs towards actual execution, delivery and performance. We are in the process of engaging world-renowned capital programme managers that will work with the most capital intensive MDAs to improve the efficiency of their project delivery from inception through procurement and implementation.
35. During the year, we also inaugurated an Expenditure Review Committee to undertake a reassessment of the budgetary allocations to recurrent expenditure, with a view to increasing efficiency and value for money. The review aims to determine where cuts can be made to recurrent expenditure without compromising quality and ensuring that scarce resources are efficiently allocated. It will also identify how the Government can partner with the private sector to improve efficiency, quality of service and promote accountability. Of particular concern is the increasingly disproportionate amount of our limited budgetary resources being channelled to service our recurrent cost commitments. The trend in rising recurrent expenditures is something we must take seriously given our level of socio-political development and the huge infrastructure deficit that must be bridged in order to achieve our national development goals.
36. We are working to computerise and automate the activities of both the Budget Office of the Federation (BOF) and the Office of the Accountant General of the Federation (OAGF) with the aim of interconnecting their operations with those of the Bureau of Public Procurement (BPP) as well as the Central Bank of Nigeria (CBN), under the Government Integrated Financial Management Information System (GIFMIS). In line with this initiative, we are establishing a well-functioning Single Treasury Account.
37. On our customs reforms, the Presidential Task Force on Customs Reform was constituted and tasked with the transformation of the Nigerian Customs Service into a modern institution with enhanced revenues, curbing inefficiencies and facilitating trade. The Presidential Task Force is required to oversee on behalf of the Nigeria Customs Service Board, the implementation of an agreed Action Plan for the structural transformation of the NCS into an efficient world-class agency, involving an overhaul of governance, organisational and leadership structures, systems, processes and procedures.
HIGHLIGHTS OF MACROECONOMIC PERFORMANCE DURING 2010
38. There has been a strong improvement in Nigeria’s macroeconomic position in the last year. This is the result of specific interventions by the Government to address the impact of the global economic crisis on the economy. These interventions include the interventions and reforms in the banking sector, the provision of intervention funds to targeted sectors of the economy, increased oil production and an accommodative monetary stance of the CBN.
39. The key indicators of the economic performance are highlighted below:
GDP: Nigeria’s GDP growth is robust. Real GDP growth in 2009 was 6.7% compared with negative growth of -0.8% globally, a contraction of -3.2% for advanced economies and expansion of 2.1% for emerging countries. For the first 3 quarters of 2010, real GDP growth was c. 7.7% against 6.6% in the same period in 2009; the oil sector grew by 4.4% compared with no growth for the same period in 2009; and the non-oil sector grew by 8.3% compared to 8.2% during 2009. The pattern of Nigeria’s growth shows that achieving sustained double-digit growth is well within reach with the implementation of an improvement in the supply of power, increased provision of credit to the real sector and continued peace & security in the Niger Delta leading to improved oil production.
Inflation: The year-on-year (y-o-y) increase in the composite Consumer Price Index (CPI) was 13.4% in October 2010. The y-o-y increase in index for all items excluding farm produce was 13.2%.
Exchange Rate: Despite the volatility in the exchange rate due to external shocks from the global financial crisis, the monetary authorities have continued to maintain a relatively stable exchange rate.
External Reserves: The external reserves level of US$34.1 billion as at 19th November, 2010 remain comfortable in the context of the external liabilities of the public and private sector as well as import coverage.
Public Debt: The total external debt stock as at September 30, 2010 was US$4.5 billion out of which US$4.15 billion or 91.6% are from concessional sources. The total domestic debt as at the same period was US$28.2 billion (N4.23 trillion). Nigeria’s debt to GDP ratio currently stands at 16.6% which is low compared to the internationally acceptable benchmark of 40% for similar countries.
Stock Market: The stock market has continued to recover. The NSE All-Share Index and market capitalisation which recorded declines of about 30.0% and 26.1% respectively by the third quarter of 2009, posted increases of 10.6% and 13.2% respectively by the third quarter of 2010.
BUDGET IMPLEMENTATION AND PERFORMANC
40. The 2010 Amendment & Supplementary Budgets were designed to stimulate the economy in view of the negative effects of the global economic crisis. The increased spending outlay in the 2010 Budgets is in line with what governments are doing globally to ameliorate the effects of the crisis and set their economies on a path of recovery. The Budgets were designed such that the allocation of resources to priority sectors, particularly critical infrastructure, would provide the enabling environment for the acceleration of sustainable economic growth and development, driven by the private sector.
41. Due to certain challenges encountered in achieving the revenue projections underpinning the 2010 Appropriation Act, it was expedient to review the underlying revenue assumptions. Accordingly, the 2010 Amendment Budget was passed on 10th August based on revised assumptions including the following:
Oil production: 2.25mbpd
Oil benchmark price: US$60/barrel
Exchange rate: N150/US$
42. In addition to amending the 2010 Budget, it was also necessary to provide for certain unexpected expenditures which were not anticipated at the time that the Executive Budget Proposals were submitted to the National Assembly in November 2009. In this regard, two Supplementary Budgets were appropriated by the National Assembly to provide for the unanticipated expenditures which include wage increases awarded to civil servants, university lecturers, medical personnel amongst others; Power Holding Company of Nigeria arrears of monetisation; and INEC voters’ registration and other activities in preparation for the 2011 elections.
43. Based on this revised budget framework, Federal Government Budget Revenue is projected at N3, 179.87 billion (inclusive of projected bond issuance proceeds and other items). Aggregate Expenditure is projected at N5, 159.66 billion, comprising capital expenditure of N1, 764.69billion and MDA Recurrent Expenditure of N2, 669.01 billion. The fiscal balance is a projected deficit of N1, 979.79 billion (or 6.06% of GDP).
44. Although there were initial challenges with revenue performance, particularly in the first quarter of the year, oil revenue receipts improved significantly during the year due to relatively higher international oil prices and the improving oil production made possible by greater peace and stability in the Niger Delta region. However, there have been some shortfalls recorded in some items of both oil and non-oil revenue. While Companies Income Tax and other taxes have performed fairly well, there have been shortfalls experienced in Customs revenue and remittances of Internally Generated Revenue. Accordingly, as at 31 October 2010, there was an aggregate shortfall of [N137.29 billion] (or 6.61%) of the [N2, 078.19 billion] projected to have been achieved in terms of FGN Budget Revenue inflows.
45. As already noted, the Government is intervening in various ways to realise revenue targets including the forensic audit of NNPC, process audits of internally generated revenue remittances from MDAs, requiring that MDAs and parastatals submit their revenue and expenditure estimates alongside operating surplus projections for 2011, accelerating customs reform and expanding the tax base; and the recent review of tariff/CET policies to remove certain items from the Import Prohibition List and apply certain levies and duties on them.
46. Despite these challenges, the implementation of the 2010 Budget is well underway with the on-going release of the recurrent and capital votes. Regarding capital budget implementation, aggregate Capital Releases to date amount to [N696.734 billion] comprising:
Q1: N197.325 billion
Q2: N200 billion
Q3: N220 billion
AIEs: N79.409 billion
47. More releases are programmed for the fourth quarter. The average Capital Utilisation as at 31 October, 2010 was 42.22%. Performance varies considerably across MDAs, but generally capital budget implementation/utilisation has improved over course of the year. To increase the quality and efficiency of spending, greater emphasis is being placed on budget implementation and service delivery, through various initiatives. For example, I had previously mentioned that the Ministry of Finance is in the process of engaging capital programme managers to assist key large-spending MDAs with capital project execution and delivery.
48. Regarding the implementation of recurrent expenditure releases are on target for Personnel Costs, Overheads, Statutory Transfers and Debt Service. Aggregate recurrent releases and statutory transfers as 31 October 2010 amount to [N2, 295.56 billion]. The Government has been able to manage the challenges encountered with lower receipts of certain items of expenditure and delays in realising certain financing items, and ensure that recurrent releases continue as programmed.
49. We have conducted a review of the existing Import Prohibition List and Tariff Structure in line with best practices to review the impact of the prohibitions on the Government’s revenue and local industry on an on-going basis. The NEMT held extensive consultations with key stakeholders and found that import bans are ineffective and result in a huge revenue loss to Government through significant trade diversion to neighbouring countries and the routine smuggling of banned goods into the country. In addition, the items on the Prohibition List cost more than what obtain in neighbouring countries due to the smuggling activities.
50. It is expected that these trends are likely to continue; therefore we have received Presidential approval to replace the bans with tariffs to protect domestic industries with regards to the following items:
Cassava: A 15% levy in addition to the substantive 20% duty;
Toothpick: A 20% levy and duty of 20%;
Furniture: A 20% levy and duty of 20%;
Textile Fabrics & Articles (Lace Fabric, Brocade, Voile, African Print etc. and Made-up Garments): A 20% levy and duty of 20%;
Waters & Beverages (excluded items like health & energy drinks only): A 10% levy and duty of 10%; and
Vehicles: Extending the age of banned used motor vehicles’ importation from 10 years to 15 years from year of manufacture.
51. A percentage of revenue from the new tariffs will be set aside for the Bank of Industry (BOI) with the exception of income from textiles where the proceeds from the levy will be used to support the domestic textile industry.
52. We have continued to pursue amendments to some of the tax laws. These include the Petroleum Industry Bill (PIB) that is currently before the National Assembly which is aimed at simplifying royalty & tax collection, capturing of windfall profits and increasing Government’s take on large profitable deep water fields. Several other tax law amendment requests, especially the Personal Income Tax Amendment Bill are pending before the National Assembly. The amendment is aimed at combining the delivery of significant levels of personal income tax relief with simplifying the tax system. A new Tax Administration Law (TAL), which will further simplify tax administration, is being prepared by the FIRS for eventual presentation to the National Assembly.
53. We are also working to further diversify our revenue base by widening our tax net. The FIRS has put the necessary framework in place for the continuous development of a database of taxpayers where every entity is uniquely identified using a Taxpayer Identification Number (TIN). This will ensure that all corporate entities in the country are registered for the purposes of taxation. The FIRS is also establishing modern links to crucial third-party data bases; such as the Corporate Affairs Commission (CAC) and the Nigeria Customs Service (NCS). In pursuit of this objective, more than 350,000 corporate taxpayers have so far been issued with a TIN. The Unified Tax Identification Number (UTIN) is a similar initiative but for the States of the Federation in collaboration with FIRS, under the auspices of the Joint Tax Board (JTB).
54. The Federal Ministry of Finance through the FIRS is to publish a National Tax Policy document. The National Tax Policy is an initiative of the Federal Government based on a report of a Study Group set up in 2002. The Policy is a set of guiding principles for all taxes in the country at all times. It has been approved by the Federal Executive Council and will be published in due course. We are working to prepare a road-map for the implementation of the Policy and assign responsibilities to key stakeholders.
PUBLIC DEBT MANAGEMENT
55. In April 2010, the Debt Management Office (DMO) in collaboration with other relevant stakeholders carried out a successful Debt Sustainability Analysis (DSA) exercise on Nigeria’s total public debt (external plus domestic debts). The outcome of the exercise indicated that the country’s total public debt is sustainable. However, this position could change in the medium to long term, if there are no efforts to ensure fiscal prudence and diversify the revenue base of Government.
56. It is also appropriate to note that with the envisaged huge capital requirement needed to address the infrastructure deficit, which is likely to come from outside the country, the need to closely monitor the country’s debt sustainability is of great importance.
57. The fiscal balance sheet remains strong and Nigeria has relatively low levels of debt as a percentage of GDP. As indicated earlier, the total external debt stock as at September 30, 2010 was US$4.534 billion out of which US$4.152 billion or 91.58% are from concessional sources. The total domestic debt as at the same period was N4.23 trillion, with FGN Bonds constituting over 65% of the domestic debt stock. [The increase in the domestic debt stock mainly reflects the successful funding of the 2010 fiscal deficit to the tune of N893 billion]. Nigeria’s debt to GDP ratio currently stands at 16.6% which is low compared to the internationally acceptable benchmark of 40% for similar countries.
Table 1: Foreign Debt Stock
Amount (US$ billion)
MULTILATERAL:World Bank Group: IBRDIDAIFADAfrican Development Bank Group:ADBADFIDBEDF