DMO Borrowed N54.6trn Without Budgetary Approval—Auditor-General

The Debt Management Office (DMO) exceeded the approved borrowing for the country by N54.57 trillion between 2020 and 2024, contracting new domestic and external debt issues totalling N88.67 trillion, the Auditor General for the Federation has reported.

The office of the Auditor General in its annual report on non-compliance/internal control weaknesses in ministries, departments and agencies (MDAs) of the federal government of Nigeria for the year ended 31st December, 2024, also faulted the DMO for failing to adhere to the limits of the estimates contained in the Appropriation Acts, saying the Federal Government’s approved debt financing of N34.10 trillion for the five year period was below the N45.63 trillion contained in the DMO’s borrowing plan.

The findings were contained in the special audit of the DMO for the period January 1, 2020 to December 31, 2024, published in the 2024 Annual Report on Non-Compliance. According to the report, the total new issues of domestic and external loans contracted by the DMO during the period amounted to N88.674 trillion, while the FGN debt financing figures contained in the approved budgets totalled N34.099 trillion.

The difference, according to the Auditor General, amounted to N54.574 trillion. The report stated, “The sum of N88,674,555,519,076.10 was the total amount of new issues of domestic and external loan issued by DMO between 2020 to 2024 while the sum of N34,099,849,671,573.00 was the total amount of FGN debt financing figures as contained in the Approved budgets for the periods 2020 to 2024.”

It further stated that “evidence of approval by the National Assembly for the excess issues was not provided for audit.” The Auditor General attributed the anomaly to weaknesses in the internal control system at the DMO, identifying the risks as contracting of unapproved new debts, transparency concerns and erosion of trust in the government’s financial reporting.

The annual figures showed that the DMO issued N8.21 trillion in new debt in 2020 against approved debt financing of N2.95 trillion, resulting in excess issues of N5.26 trillion. In 2021, new issues stood at N9.66 trillion against N5.40 trillion approved, leaving an excess of N4.26 trillion.

The gap stood at N3.91 trillion in 2022 when new issues reached N10.21 trillion compared with approved debt financing of N6.30 trillion. The largest variance was recorded in 2023, when new issues rose to N39.19 trillion against N10.58 trillion approved, representing excess issues of N28.62 trillion. In 2024, the DMO recorded new issues of N21.40 trillion against approved debt financing of N8.88 trillion, producing an excess of N12.52 trillion.

However, the DMO rejected the basis of the Auditor General’s calculation, arguing that the N88.67 trillion figure was misleading because it included borrowing components that should not be classified as new borrowing.

The debt office said the audit observation arose from a comparison between N88.67 trillion reported as total new domestic and external debt issues and N34.10 trillion reported as total approved new borrowings in the Appropriation Acts.

“The observation on N88.67 trillion is misleading as it arose from a misclassification of borrowing components and an understatement of approved amount’s such as refinancing of maturing obligations,” the DMO stated.

It explained that refinancing of maturing obligations, including Nigerian Treasury Bills, FGN Bonds, Sukuk and Green Bonds, should not be treated as additional borrowing.

“Refinancing of maturing obligations (e.g., Nigerian Treasury Bills (NTBs), FGN Bonds, Sukuk, Green Bonds), which are not provided for in the Appropriation Acts,” the DMO said, adding that refinancing maturing obligations was a best practice in public debt management.

The DMO also pointed to the securitisation of Ways and Means Advances, saying the Federal Executive Council and National Assembly approved N22.719 trillion in 2023 and an additional N47.30 trillion in 2024, bringing the total to N70.019 trillion.

It also cited other specific borrowings approved by the Federal Executive Council and National Assembly for project specific facilities, including the Kano to Maradi Rail Line. On the N34.10 trillion approved borrowing figure used by the Auditor General, the DMO said this was also inaccurate.

“Additionally, the audit observation’s reference to N34.10 trillion as total approved borrowings in the Appropriation Acts (2020 to 2024) is inaccurate. The correct total approved borrowing figure inclusive of supplementary appropriations, is N40.50 trillion,” it stated.

The DMO put approved borrowing at N4.586 trillion in 2020, N6.199 trillion in 2021, N7.260 trillion in 2022, N13.573 trillion in 2023 and N8.880 trillion in 2024, giving a total of N40.496 trillion. The debt office said the understatement partly arose from the exclusion of supplementary appropriations in some fiscal years and the misclassification of debt service provisions in the Appropriation Acts as new borrowings.

It said, “We observed that the understatement partly arose from the exclusion of supplementary appropriations in some fiscal years and in some cases misclassification of debt service provisions in the Appropriation Acts as the New Borrowings.”

The DMO further presented a broader calculation which included approved borrowing, refinancing of domestic FGN securities, domestic project financing, securitisation of Ways and Means and issuance of promissory notes.

DMO put the combined figure for 2020 to 2024 at N95.636 trillion. This comprised N40.496 trillion in approved borrowing, N23.087 trillion in refinancing of domestic FGN securities, N455.98 billion in domestic project financing, N30.019 trillion in securitisation of Ways and Means and N1.578 trillion in issuance of promissory notes.

The DMO maintained that refinancing of maturing NTBs, FGN Bonds, FGN Savings Bonds, Sukuk and Green Bonds “is not an additional borrowing as they do not increase the public debt stock in the fiscal year.”

Despite the explanation, the Auditor General rejected the DMO’s response and maintained the finding. “The Management’s response to the issue has been noted; however, it is deemed unsatisfactory. Consequently, the findings remain valid until the recommendations are implemented,” the report stated.

The Auditor General recommended that the DMO’s Director General should justify to the Public Accounts Committees of the National Assembly the excess debt issues amounting to N54.574 trillion, as it stressed that the debt office provide evidence of National Assembly approval for the excess issues and account for the excess.

In a separate finding, the Auditor General also faulted the DMO for non adherence to the FGN borrowing plan, putting the variance at N11.529 trillion. According to the audit, the total FGN approved appropriations for debt financing from 2020 to 2024 amounted to N34.10 trillion, while the DMO’s FGN borrowing plan stood at N45.63 trillion, resulting in a variance of N11.529 trillion.

The report said the aggregate value of the FGN debt financing was projected in excess of the approved estimates for the period. It stated that the debt office “failed to adhere to the limits of the estimates set out in the Appropriation Acts.”

The borrowing plan figures showed that the DMO’s plan stood at N4.007 trillion against approved debt financing of N2.952 trillion in 2020, creating a variance of N1.055 trillion. In 2021, the borrowing plan was N5.629 trillion against N5.396 trillion approved, representing a variance of N232.68 billion.

The variance rose to N802.07 billion in 2022, with the DMO’s borrowing plan at N7.097 trillion against N6.295 trillion approved. In 2023, the plan stood at N12.675 trillion against approved debt financing of N10.575 trillion, creating a variance of N2.10 trillion. The largest variance came in 2024, when the DMO’s borrowing plan reached N16.220 trillion against N8.880 trillion approved, resulting in a variance of N7.340 trillion.

The DMO, in its response to this finding, attributed the N11.53 trillion variance to differences between amounts raised under its issuance programme and new borrowings contained in the Appropriation Acts.

“The audit observer observed a variance of N11.53 trillion between amounts raised under the DMO’s Issuance Programme and new borrowings in the Appropriation Acts, suggesting non adherence to the FGN Borrowing Plan. This observation results from a misinterpretation of the Domestic Securities Issuance Programme,” the DMO stated.