Transcript Slide 1

Sustainability of the Debt Relief - Nigeria’s Case
Remarks at
The Slate is Clean: What’s Next?
Conference on Debt Relief in Africa
By
Abraham Nwankwo
Director-General, Debt Management Office
(Presidency)
Abuja – Nigeria
Egmont Palace, 8bis Place du Petit Sabion, 1000 Brussels, Salle Arenberg
September 26, 2012
Outline
I.
II.
III.
IV.
Debt Relief
Analytical & Policy Initiatives
Institutional Building Initiatives
Development of the Domestic Bond Market as Alternative Viable
Borrowing Source
V. Overall Economic Performance
VI. Nigeria’s Debt Sustainability Situation
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I. Debt Relief

Nigeria’s Paris Club (PC) debt at exit was US$30.85 billion in 2004; total external debt was
US$35.94 billion

Nigeria was a non-HIPC

Despite four previous reschedulings, Nigeria was still unable to meet up with its PC debt
obligations

Nigeria had no option but to approach the Paris Club creditors for debt write-off

In 2005, Nigeria obtained a 62% debt write-off of its PC debt amounting to US$18.75 billion

A total sum of US$12.09 billion was paid to the creditors to free Nigeria of its PC debt

Nigeria’s external debts was brought to a sustainable level of about US$3.54 billion in 2005, and
still remains sustainable to date
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II. Analytical & Policy Initiatives
 Annual Debt Sustainability Analysis (DSA) commenced 2005
 Incorporated State Governments’ domestic debt data and contingent
liabilities in the annual DSA in 2010
 First National Debt Management Framework (NDMF, 2008 – 2012)
introduced 2008
 National Medium Term Debt Management Strategy (MTDS, 2012 – 2015)
introduced 2012
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III. Institutional Building Initiatives
 Public Debt Management more complex in a Federal System
 Nigeria has one Central Government and 36 State Governments, which exercise
a high degree of fiscal autonomy
 Establishment of Debt Management Departments by the Debt Management
Office in all the 36 States commenced in 2007
 Involves:
• Institutional and Capacity Building
• Legal Framework
• Coaching and Supervision
• Domestic Debt Data Reconstruction
 Exercise will be concluded by end-2012
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IV. Development of the Domestic Bond Market as Alternative Borrowing Source
2010
2011
2012*
-
-
-
-
-
-
-
2,268
1,781
2009
2,000
√
-
√
-
-
-
-
-
-
√
√
√
√
√
√
√
√
√
√
√
√
√
√
-
-
-
-
√
√
√
√
√
√
√
-
√
1,000
-
√
√
592
245
500
282
√
√
178
10-YEAR
√
140
7-YEAR
326
613
5-YEAR
√
846
3-YEAR
1,167
1,500
863
2008
863
√
2007
1,073
-
2006
Allotment
1,341
2-YEAR
2005
Subscription
726
-
Issuance
Tenor
694
2004
Regular Monthly Issuance Phase
492
2003
2,500
515
Smoot
hening
Phase
592
Testing
Phase
• Issuance, Subscription & Allotment
1,244
• FGN Bond Market Transformation: Progression of Tenor Elongation
20-YEAR
-
-
-
-
-
-
2005
2006
2007
2008
2009
2010
2011
* As at end-August 2012
•
•
•
•
•
PDMMs System introduced 2006, regular engagement with the PDMMs and relevant stakeholders.
The existing 3-, 5-, 7-, 10- and 20-year FGN Bond benchmark yield curve was achieved in 2008
Secondary market transactions grew from 5,482 in 2006 to 135,874 in 2010 before dropping to 65,316 in 2011, with value of N585bn, N13.6tn and N8.94tn, respectively
Market capitalization of outstanding FGN Bonds stood at N3,192.30tn as at end-June 2012
Domestic Debt Market has recorded significant improvement in depth, liquidity and sustainability
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IV CONTD.
FGN Bond Market by Category of Holders (N Billion)
2002
2009
2002
2011
Banks & Dis.
Houses
Non-Bank
Public
Sinking Fund
Total
2009
2011
Instruments
Holder
CBN
FGN Bond Market by Type of Instruments (N Billion)
Amount
%
Amount
%
Amount
%
532.5
45.67
323.18
10.01
348.84
6.21
460.2
173.3
nil
1,166
39.47
14.86
nil
100
1,274.58
1,345.55
284.72
3,228
39.49
41.68
8.82
100
3,790.90
1,336.61
146.49
5,622.83
Amount
%
Amount
%
Amount
%
NTBs
733.76
62.9
797.5
24.7
1,727.91
30.73
Promissory
Notes
nil
nil
63.0
1.95
nil
nil
FGN Bonds
nil
nil
1,974.9
61.2
3,541.19
62.98
Treasury
Bonds
430.61
36.9
392.0
12.1
353.73
6.29
Development
Stocks
1.63
0.12
0.52
0.02
-
-
Total
1,166.00
100
3,228.0
100
5,622.83
100
67.42
23.78
2.61
100
• Dominance of long-termed debt instruments and holding structure skewed in favour of the private sector have helped to
establish a debt market driven by market forces.
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IV CONTD.
 With effect from October 1, 2012, JP Morgan will include
FGN Bonds in its Government Bond Index-Emerging
Markets (GBI-EM)
 This development is an independent external recognition
that the transformation of the domestic bond market has
been executed in a manner that has enhanced the
quality and strength of the domestic financial markets.
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V. Overall Economic Performance
• Nigeria’s economic performance has been remarkably stable
Real GDP Growth Rate
30.0%
Average Real GDP Growth
2003-2011E (%)
25.0%
Angola
11.6
20.0%
2007
2008
2009
2010
2011
Kazakhstan
Mongolia
Nigeria
Peru
Venezuela
Zambia
5.2
Kazakhstan
3.3
Peru
2.8
7.3
Peru
6.6
Zambia
6.1
Gabon
2.4
Venezuela
4.5
Nigeria
1.9
Gabon
2.9
Zambia
0.8
-10.0%
Gabon
Mongolia
Kazakhstan
-5.0%
Angola
8.1
7.6
0.0%
2006
Venezuela
Nigeria
5.0%
2005
8.4
8.6
10.0%
2004
Angola
Mongolia
15.0%
2003
GDP Growth Volatility
2003-2011E
(standard deviation, in
%)
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VI. Nigeria’s Debt Sustainability Situation
2004
2010
2011
Amount
(US$ Billion)
% of Total
Debt/
GDP
Amount
(US$ Billion)
% of Total
Debt/
GDP
Amount
(US$ Billion)
% of Total
Debt/
GDP
External Debt:
Federal &
States
35.94
77.7
41.88
4.57
11.42
2.01
5.67
11.83
2.38
Federal
Domestic Debt
10.31
22.3
12.02
30.51
76.10
13.39
35.88
74.92
15.07
States Domestic
Debt
-
-
-
5.00
12.48
2.20
6.35
13.25
2.67
46.25
100
53.90
40.10
100
17.20
47.89
100
20.12
Type
Total
• Public debt management has been strengthened by institutional reforms and appropriate legal and fiscal frameworks - Fiscal
Responsibility Act 2007, Medium Term Expenditure Framework, fiscal consolidation, etc.
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THANK YOU