The federal government, through the Debt Management Office (DMO), in 2021 raised N2.72 trillion from FGN bonds as well as the savings bond.
This is even as analysts urged government to ensure that the nation’s borrowing is used to enhance the country’s growth.
Data from the DMO showed that N2.712 trillion was raised through the monthly FGN bond auctions between January and December 2021 while N8.09 billion was raised through the savings bond between January and November.
The amount raised through FGN Bonds was a 44 per cent improvement on 2020 when it raised N1.8 trillion.
Last year, due to the Covid-19 pandemic and restrictions, the Savings Bond auction did not hold for four months between April and July.
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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 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 N10.13trn to fund the budget and the resulting deficit of N6.3trillion is expected to be financed by new external and domestic borrowing, 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 of June to N38 trillion at the 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 by the end of September, the public debt was 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 N2.5 trillion on debt servicing payments – N1.7 trillion on servicing domestic debts and N755 billion spent on external debt servicing.
By the end of September, total domestic debt was N22.4 trillion. This constitutes 59 per cent of total public debt and 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 per cent 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 securitisation of the ways and means advances from the Central Bank of Nigeria (CBN), the domestic debt stock is likely to increase. As of end-October ‘21, the stock of CBN’s ways and means advances stood at N12.8 trillion,” the analysts noted.