Data released by the Debt Management Office (DMO) showed that the federal government in 2021 raised 2,722 billion naira through FGN bonds as well as 8.09 billion naira through savings bonds.
It was then that analysts urged the government to ensure that the debt incurred is used to improve the country’s growth.
The amount raised through FGN bonds was a 44% improvement over what he raised in the bond auction in 2020 when he raised 1,800 billion naira.
Last year’s outcome was influenced by the pandemic and the Covid-19 restrictions, which prevented the Savings Bonds auction from being held between April and July.
Commenting on the country’s debt level, Coronation Merchant Bank analysts noted that as a percentage of total GDP, Nigeria’s public debt burden is relatively low compared to comparable emerging market economies.
They noted, however, that the onus was on the federal government to productively use the borrowed funds to improve GDP growth and, by extension, ensure economic development.
“The FGN aims to earn 10.13 trillion naira to finance the budget and the resulting deficit of 6.3 trillion naira is expected to be financed by new external and domestic borrowing, proceeds from privatization and drawings on multilateral / bilateral loans. “
According to the DMO report, Nigeria’s total public debt increased by 7.2% or 2.5 trillion naira, from 35.5 trillion naira at the end of June to 38 trillion naira at the end of September 2021. Compared to the same period last year, the total public debt debt increased by 17.9% or 5.8 trillion naira.
Coronation Merchant Bank analysts noted that at the end of September, public debt was equivalent to 24.9% of nominal GDP in 2020.
âThis is in line with the DMO’s debt management targets for the period 2020-2023, which raised the public debt ceiling to 40% of GDP and target a domestic debt to external debt ratio of 70:30. In the first nine months of 2021, Nigeria spent 2.5 billion naira on debt servicing, 1.7 trillion naira on domestic debt servicing and 755 billion naira on external debt servicing .
âAt the end of September, the total domestic debt stood at 22.4 trillion naira. This represents 59 percent of total public debt. Much of this was due to the increase in FGN bond and Nigerian Treasury bill (NTB) issuance over the three months. In terms of composition, FGN bonds and BNTs account for 93% of total domestic debt, while FGN sukuk, treasury bills, savings bonds, green bonds and promissory notes make up the remaining 7%. .
âWe find that with the securitization of the Central Bank of Nigeria’s (CBN) ways and means advances, the stock of domestic debt is likely to increase. At the end of October 21, the stock of Ways and Means advances in the CBN stood at N12.8 trillion. “