Improving Public Debt Management
In the OIC Member Countries
116
The National Debt Management Framework for the years 20132017 sets the following debt
management objectives (DMO 2013, p. 3):
 Efficiently managing the nation’s public debt in terms of welldiversified and sustainabledebt portfolio, supportive of government and private sector needs;
 Meeting the government’s financing needs at minimal cost and with prudent degree of riskover the medium to longterm;
 Ensuring the growth and development of the country’s domestic and internationalsecurities markets.
The DMO prepared the first mediumterm debt management strategy (MTDS) for the years
20122015 (DMO 2012). In 2016, the DMO and other stakeholders24 developed the MTDS for
the years 20162019 (DMO 2016). The MTDS describes how the government’s primary budget
balance should optimally be financed, with respect to macroeconomic developments and
market conditions such as interest and exchange rates, inflation, output and external reserves.
Public debt management faces three main challenges (see also Table 49):
 Cost of debt: the weighted average interest rate was high at 10.77%, caused mainly by thehigh interest rates on domestic debt;
 Refinancing risk: more than 30% of domestic debt matures within one year;
 Interest rate risk: more than 30% of domestic debt has to be refixed within one year.
Table 4-9: Nigeria - Risk Indicators for the Government's Debt Portfolio (2015)
Type of risk Risk indicator Domestic
Debt
External
Debt
Total
Debt
Targets
(tot.
debt)
Solvency Nominal debt (% of GDP) 8.91 2.20 11.11
NPV of debt (% of GDP) 8.91 1.44 10.35
Cost of Debt Interest payment (% of GDP) 1.16 0.04 1.20
WAIR (%) 13.00 1.74 10.77
Refinancing
risk ATM (years) 5.35 14.39 7.15 Min: 10
Debt maturing in 1 year (% of total) 36.08 1.16 29.15 Max. 20
Debt maturing in 1 year (% of GDP) 3.21 0.03 3.24
Interest rate
risk ATR (years) 5.35 13.86 7.04 Min: 10
Debt refixing in 1 year (% of total) 36.08 6.40 30.19
Fixed rate debt (% of total) 100.00 94.77 98.96
Exchange
rate risk FX debt (% of total) 19.84 40
ST FX debt (% of reserves) 0.44
Note: ATM = Average Time to Maturity; ATR = Average Time to Refixing; FX = Foreign exchange; NPV = Net
present value; ST = hort-term; WAIR = Weight d average interest rate.
Source: DMO (2016).
24 Stakeholders include the Federal Ministry of Finance, the Federal Ministry of Budget and National Planning, the centralbank, the Budget Office of the Federation, the National Bureau of Statistics, and the Office of the AccountantGeneral of
the Federation.