DAILY TRUST
Nigeria’s debt profile has jacked up to N81 trillion following the latest Naira devaluation by the Central Bank of Nigeria (CBN).
Daily Trust reports that the CBN on Wednesday officially unified all segments of the forex exchange (FX) market.
The devaluation saw the dollar, which exchanged at N430 as at the end of the first quarter when the Debt Management Office last published our national debt profile, shot to N664/$ at the close of trading at the import and export window yesterday.
The devaluation automatically increased the Naira component for debt service by N9 trillion.
The DMO recent statement noted that, “As of December 31, 2022, the Total Public Debt Stock was N46.25 trillion or USD103.11 billion. This amount is not inclusive of the recently approved conversion of the N27tr ways and means loan by the National Assembly, which brings the new total to over N72 trillion.
In 2020, the devaluation of the Naira increased the nation’s total debt profile by about N1 trillion.
“In terms of composition, total Domestic Debt Stock was N27.55 trillion (USD 61.42 billion) while Total External Debt Stock was N18.70 trillion (USD 41.69 billion).”
When Daily Trust multiplied the total external debt stock by the new exchange rate, it revealed that an additional N9 trillion will be required to procure the foreign exchange needed to service our debt.
In the same vein, Africa tax lead at PriceWaterhouseCoopers, Mr Taiwo Oyedele noted that there will be a corresponding increase in debt service cost concerning foreign debt service.
He also predicted a possible reduction in the budget deficit if the government’s forex revenue exceeds foreign currency obligations but added that an increase in the budget deficit will occur if otherwise.
Furthermore, Oyedele predicted a possible impact on the pump price of petrol inching closer to the current pump price of diesel as a result of the current policy.
“Moreover, it is expected that the country will attract forex inflows, especially from portfolio investors, foreign direct investors (FDI), and exporters’ proceeds and diaspora remittances. Furthermore, the capital market is expected to benefit from the unification of exchange rates as the market which has been rising significantly is likely to appreciate further as foreign investors move in to take position,” he further explained.
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