For instance, in 2012 errors and omissions were 10 percent of total imports.
The authorities recently made information available on domestic debt of state and local governments (estimated at about 1.7 percent of GDP in 2011 in commercial bank loans and State bonds and 1.5 percent of GDP in arrears and other liabilities see http://bit.ly/1fjOmpD). Sub-national borrowing is currently limited and tightly regulated. However, the exposure of the multiplicity of off-budget funds is unknown.
External debt data provided by the authorities do not include publically-guaranteed debt.
The DSA is based on the WEO’s latest projections for Brent crude prices. Nigerian oil price is projected by using the relation for the previous period between the Nigerian oil prices and Brent oil prices.
The Sinking Fund is estimated to be worth N6.4 trillion at the end of 2023: the annual contributions of 0.5 percent of total assets by Deposit Money Banks (DMBs) (about N23 trillion at end-2013) are assumed to grow at 20 percent) and the 50 billion by CBN every year are assumed to accrue 10 percent return. The fund will be used to fill the gap in the AMCON’s balance sheet of about N3.4 trillion (assets and bond liabilities are about N2.3 trillion and N5.7 trillion respectively as of September 2013). It will also pay for net interest expenses on its bonds, which over 10 years is estimated to be about N4.0 trillion. All assets are assumed to be sold at face value or higher to cover other operating costs.
The LIC debt sustainability framework (DSF) provides a methodology for assessing external debt sustainability that is guided by indicative, country-specific, debt-burden thresholds based on the relative strength of a country’s policies and institutions. Given Nigeria’s rating of 3.5 (medium performer), which is the three year average of the World Bank’s Country Policy and Institutional Assessment (CPIA), the relevant country-specific thresholds are a PV of external debt-to-GDP ratio of 40 percent, a PV of external debt-to-exports ratio of 150 percent, and an external debt service-to-exports ratio of 20 percent.
The historical average of the noninterest current account surplus is much higher at 9.6 percent than the average of about 3 percent for 2013–18, and treating the difference as “residual borrowing” becomes explosive over time.
Note that the projection does not fully capture a possible volatility in real GDP growth. For instance, if one were to replicate the same level of volatility in real GDP growth in the next five years (2014–18) as was observed in the 2004–2008 period, the PV of debt-to-export ratio would breach the indicative policy threshold at least once (in 2018).