FG Asks Debt Management Office to Raise Fresh N758bn Debt to Clear Pension Arrears
- The Federal Government of Nigeria has asked the Debt Management Office to raise fresh N758 billion debt
- This will be used to offset the backlog of pension arrears owed to thousands of retired Nigerian workers
- This is going to further increase Nigeria's debt profile, pushing it closer to the N150 trillion predicted by experts
Legit.ng journalist Ruth Okwumbu-Imafidon has over a decade of experience in business reporting across digital and mainstream media.
The federal government has approved the Debt Management Office (DMO) to raise N758 billion from issuing bonds.
This sum will go into clearing pension backlogs to provide relief for pensioners.
Minister for Finance, Wale Edun, disclosed this to State House Correspondents in a briefing after the Federal Executive Council (FEC) meeting in Abuja, on Tuesday.
Edun noted that this would cover all pension debts dating as far back as the pre-2004 under the old Defined Benefit Scheme, and more recent ones incurred under the Contributory Pension Scheme.
Source: Twitter
Recall that pensioners threatened a nationwide protest over N193 billion in accumulated pension debts.
FG moves to clear pension arrears
Edun explained that the Executive council had considered several options before arriving at the decision, the PUNCH reports.
He noted that clearing the backlog is considered a social intervention programme to provide much relief to affected pensioners who have long awaited their payments.
The coordinating minister of the economy noted that some of these funds were owed under the Defined Benefit Scheme, and had to be updated with the Contributory Pension Scheme in 2004, and in 2014 when there was a subsequent update.
Edun explained;
“There were some accrued liabilities which were building up over time. So, for example, someone who was on the defined benefit scheme yet to retire would need a top-up of their contributions or the amount due to them every time there was a wage increase, every five years or so. So, this liability built up to a point where it would not be easy to pay them down on an ongoing basis.”
On this note, the Federal Executive Council approved the Debt Management Office (DMO) to raise fresh N758 billion from bonds to take care of these backlogs.
Economic Analyst, Olumide Adesina, said in a chat with Legit.ng that issuing bonds also qualifies as debt. He explained;
"It is just like the Federal government borrowing from the citizens, or from the people who buy the bond. The yield is the interest the government will pay to them when it matures. The difference between this and regular debts is that the government gets to decide the percentage from the outset, and it is backed by the integrity of the government"
The Federal Government has similarly approved a long-term concessional financing of €30 million (or N46.30 billion) from the French Development Agency, to be channelled into providing sustainable housing alternatives for university students in Nigeria.
In recent news, the Debt Management Office has debunked media reports saying that President Tinubu inherited N21 trillion in public debt, insisting that Nigeria's debt as of May 29, 2023, was N87.38 trillion.
Most recent data from DMO says Nigeria's debt profile has risen to N142 trillion as at September 2024.
Debt Management Office lists Nigeria's debtors
In related news, Legit.ng recently published a list of countries and foreign institutions that Nigeria owes $43 billion in foreign debt.
Nigeria’s largest foreign debt is $16.83 billion owed to the International Development Association (IDA) under the World Bank Group.
Also under the World Bank Group, Nigeria owes the International Bank for Reconstruction and Development $485 million.
Nigeria also owes several subsidiaries under the African Development Bank Group including the African Development Bank which it owes $1.619 billion.
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Source: Legit.ng
Ruth Okwumbu (Business Editor) Ruth Okwumbu-Imafidon is a business journalist with over a decade's experience. She holds both a Masters' and B.Sc. degrees Mass Communication from the University of Nigeria, Nsukka, and Delta State University. Before joining Legit.ng, she has worked in reputable media including Nairametrics. She can be reached via ruth.okwumbu@corps.legit.ng
Olumide Adesina (Cryptocurrency expert and senior analyst at Quantum Economics) Olumide Adesina is a French-born financial market writer and trader who tracks, analyses and reports changes in financial markets. Olumide has over 15 years of working experience in investment trading. He reports news about the international and Nigerian financial markets. His byline has appeared across news platforms like Yahoo Finance, Yahoo New Zealand, CoinDesk, Nasdaq, TheCable, and Africa Report, among others.
