The Minister of Finance, Budget and National Planning, Zainab Ahmed has said the country is planning to reduce its debt service revenue ratio and the government is not planning to explore the bonds market in 2023.
She stated this in an interview with Bloomberg TV at the ongoing World Economic Forum in Davos, Switzerland. According to her, the Federal Government is working to reduce its debt servicing to revenue ratio to from 80 per cent in 2022 to 60 per cent in 2023.
According to the Debt Management Office, the country’s public debt rose to N44.06tn in the third quarter of 2022.
She said, “We are sustainable in our debt trajectory. We have made our plan to make sure we are able to consistently service our debts. And by the way, we are also exiting fuel subsidy which is a huge cost.
“I am part of the contributors to where we are in terms of the debt stock. So, once we pull the fuel subsidy out, production of crude oil increases, and then we sustain the improvement we have, put in place in terms of nonoil revenue, then we should be able to come down to 60 per cent to debt to revenue ratio.
“In 2023, we are not in the bond market. If we are able to get back to the rates of early 2021, then we can consider going back to the bond market. But we are consistently monitoring the bond market, we are monitoring the performance of our bonds, and when it get to that comfortable level, we will explore it.”
According to her, the government is planning to improve oil production to 1.6 million barrels per day in 2023 and consolidate its non-oil revenue base. She explained that growth in the nation slowed in the third quarter of 2023 but might moderate to 3.5 per cent in 2023.
Ahmed stated, “Well for 2023 we are looking at a growth of 3.5 per cent and we are looking at closing 2022 to around the same number as well. We are still waiting for our last quarter report to come out.
“Growth has slowed down a bit in the third quarter of 2022, and therefore we have had to moderate our year projections to reflect that decline. What will drive 2023 forward is the increase in revenue from the non-oil sector and also the beginning of the pickup of revenue from the oil sector itself.
“I am sure you know that we’ve had some problems regarding production but the production has picked up and it looks good to reach the number that we put int the budget. Our target for 2023 is 1.6 million barrels per day. We can comfortably achieve that. We are about 1.25 million, 1.3 million now average off. We should be able to reach that, and hopefully we surpass that as well with the measure that has been put in place.”
Commenting on why the Federal Government is just trying to convert its Ways and Means loans into 40-year bonds, she noted that it had to amend the finance act of 2021.
She added, “What we are trying to do with the Ways and Means is legal, and we couldn’t do it earlier on because there were limitations as provided in the fiscal responsibility act.
“But in the 2021 finance act, we actually made an amendment that is enabling us to do that now. We could have done it earlier. It is the necessary thing to do, and it is the right thing to do. We don’t want to leave this for another administration to inherit. So, what we have also is a situation where this will provide significant fiscal relief because it is bringing down the cost of servicing the Ways and Means.”
