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

2. Outline 2 I.Debt Relief II.Analytical & Policy Initiatives III.Institutional Building Initiatives IV.Development of the Domestic Bond Market as Alternative Viable Borrowing Source V.Overall Economic Performance VI.Nigeria’s Debt Sustainability Situation

3. I. Debt Relief 3 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

4. II. Analytical & Policy Initiatives 4 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

5. III. Institutional Building Initiatives 5 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

6. IV. Development of the Domestic Bond Market as Alternative Borrowing Source 6 Tenor Testing Phase Smoot hening Phase Regular Monthly Issuance Phase 2003200420052006200720082009201020112012* 2-YEAR-- √ ------- 3-YEAR √ - √√√√√√√ - 5-YEAR √ -- √√√√√√√ 7-YEAR √ -- √√ ---- √ 10-YEAR √ --- √√√√√√ 20-YEAR----- √√√ - Issuance, Subscription & Allotment FGN Bond Market Transformation: Progression of Tenor Elongation * 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

7. Instruments 200220092011 Amount% % % NTBs 733.7662.9797.524.71,727.9130.73 Promissory Notes nil 63.01.95nil FGN Bonds nil 1,974.961.23,541.1962.98 Treasury Bonds 430.6136.9392.012.1353.736.29 Development Stocks 1.630.120.520.02-- Total 1,166.001003,228.01005,622.83100 7 Holder 200220092011 Amount% % % CBN 532.545.67323.1810.01348.846.21 Banks & Dis. Houses 460.239.471,274.5839.493,790.9067.42 Non-Bank Public 173.314.861,345.5541.681,336.6123.78 Sinking Fund nil 284.728.82146.492.61 Total 1,1661003,2281005,622.83100 FGN Bond Market by Type of Instruments (N Billion) FGN Bond Market by Category of Holders (N Billion) 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. IV CONTD.

8. 8 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.

9. 9 Nigeria’s economic performance has been remarkably stable Average Real GDP Growth 2003-2011E (%) Angola11.6 Mongolia8.6 Nigeria7.6 Kazakhstan7.3 Peru6.6 Zambia6.1 Venezuela4.5 Gabon2.9 GDP Growth Volatility 2003-2011E (standard deviation, in %) Angola8.4 Venezuela8.1 Mongolia5.2 Kazakhstan3.3 Peru2.8 Gabon2.4 Nigeria1.9 Zambia0.8 Real GDP Growth Rate V. Overall Economic Performance

10. VI. Nigeria’s Debt Sustainability Situation 10 Type 200420102011 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 35.9477.741.884.5711.422.015.6711.832.38 Federal Domestic Debt 10.3122.312.0230.5176.1013.3935.8874.9215.07 States Domestic Debt ---5.0012.482.206.3513.252.67 Total46.2510053.9040.1010017.2047.8910020.12 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.

11. THANK YOU