FG Raises N2.7trn Through FGN Bonds, N8.09bn Via Savings Bond In 2021

Data released by the Debt Management office (DMO) has showed that the federal government in 2021 raised N2.72 trillion through FGN Bonds as well as the N8.09 billion through Savings Bond.

This is as analysts have urged the government to ensure that the debt being incurred is used to improve on the country’s growth.

The amount raised through the FGN Bonds was a 44 per cent improvement on what it raised through the bond auctions in 2020 when it raised N1.8 trillion.

Last year’s outcome was influenced by Covid-19 pandemic and restrictions, which stopped the Savings Bond auction from holding between April to July.

Commenting on the debt level of the country, analysts at Coronation Merchant Bank noted that as a percentage of total GDP, Nigeria’s public debt burden is relatively low compared to peer emerging market economies.

They however noted that that the onus is on the federal government to make productive use of the borrowed funds to improve GDP growth and by extension, ensure economic development, “The 2022 FGN budget has been pegged at N16.4 trillion.

“The FGN aims to earn N10.13 trillion to fund the budget and the resulting deficit of N6.3 trillion is expected to be financed by new external and domestic borrowings, privatisation proceeds, and multilateral /bilateral loan drawdowns.”

According to the DMO report, Nigeria’s total public debt rose by 7.2 per cent or N2.5 trillion from N35.5 trillion at end-June to N38 trillion at end of September 2021. When compared to the same period last year, the total public debt increased by 17.9 per cent or N5.8 trillion.

Coronation Merchant Bank analysts noted that as at end- September, the public debt is equivalent to 24.9 per cent of 2020 nominal GDP.

“This is in line with the DMO’s debt management targets for the period 2020-2023 which raised the ceiling for public debt to 40 per cent of GDP and targets a domestic to external debt ratio of 70:30. In the first nine months of 2021, Nigeria spent N2.5trn on debt servicing payments, N1.7 trillion was spent on servicing domestic debts and N755 billion spent on external debt servicing.

“As at end-September, total domestic debt was N22.4 trillion. This constitutes 59 per cent of total public debt. This was largely due to increased issuances of FGN bond and Nigerian treasury bills (NTBs) over the three months. In terms of composition, FGN bonds and NTBs make up 93% of total domestic debt while FGN sukuk, treasury bond, savings bond, green bond and promissory notes make up the remaining seven per cent

“We note that with the securitization of the ways and means advances from the Central Bank of Nigeria (CBN), the domestic debt stock is likely to increase. As at end-October ‘21, the stock of CBN’s ways and means advances stood at N12.8 trillion.”