The strategy allows the government to borrow more from domestic sources. The Debt Management Office disclosed this in a press release titled “Federal Executive Council approves a new debt management strategy for Nigeria’.
Part of the statement said, “Based on the current public debt stock, government’s we need to borrow from the medium-term (as stated in the 2021 Appropriation Act, MTEF, 2021-2023), as well as future global trends, Nigeria’s 2020-2023 MTDS can be summarized as follows:
“Borrowing will be from domestic and external sources but a larger proportion of new borrowing will be from domestic sources using long-term instruments while for external borrowing, concessional funding from multilateral and bilateral sources will be prioritized.”
The total public debt as percentage of Gross Domestic Product for 2020 to 2032 increased from 25 per cent to 40 per cent in order to accommodate new borrowings to fund budget deficit and other obligations of government, the statement said.
It added that promissory notes were to be issued to settle government arrears, and the ways and means advance at the Central Bank of Nigeria.
According to the statement, domestic debt was pegged at 70 per cent maximum while external debt was 30 per cent maximum, to further strengthen the domestic debt market and optimize access to both concessional and commercial sources of funding.
This was to sustain the issuance of longer tenured instruments with tenors of 10 years and above, in order to effectively manage refinancing risks.