The 2023 Appropriation Act’s legal new borrowing limit will not be exceeded, according to the Debt Management Organization (DMO).
The Federal Government reportedly borrowed N2.13 trillion between January and February of this year through ordinary bond issuance, retail savings bonds, and treasury bills, according to a report on which the DMO was acting.
The research also raised the concern that, at current rate, the country might incur more domestic debt than its projected 7.04 trillion N borrowings for 2023.
The Federal Government of Nigeria Savings Bonds (FGNSBs), a retail monthly debt issuance introduced in 2017, raised N533.03 million in January 2023. The government also raised N662.617 billion through its regular bond auction, N277.468 billion through Nigerian Treasury Bills (NTBs), and N532.617 billion through NTBs.
The government raised N1.271 billion through the FGNSBs, N417.064 billion through NTBs, and N770.56 billion through bond auctions this month.
In response, the DMO stated that its domestic issuance program is intended to refinance the FGN’s maturing liabilities during the fiscal year as well as provide funds to cover the budget deficit.
“Thus while a total of N2.129 trillion has been raised in January and February from issuances of FGN bonds, Nigerian Treasury Bills and FGN Savings Bond, only N1 trillion has been deployed for deficit financing, representing 14.2 per cent of the total requirement of N7.043 trillion for the year.”
“It should be noted that the balance of the funds raised is for refinancing of maturing obligations,” DMO stated.
The DMO claims that despite making the most of the opportunity presented by the robust investor demand to raise money to support the early implementation of the 2023 budget, it is always guided by the law and is therefore not permitted to go over the legally permitted new borrowing in the Appropriation Act.
In the third quarter of 2022, Nigeria’s total public debt was N44.06 trillion; by May of this year, it is anticipated to reach N77 trillion. This has sparked a protracted national discussion on the weight of sustainability in the face of diminishing national revenue and the growing size of debts.
Due to sovereign downgrades by international rating agencies, which come with a higher risk profile and cost for international debt issuances, the Federal Government appears to have restricted its borrowing to the domestic capital market to finance the N8.8 trillion regular debt component of the N10.78 trillion deficit in the 2023 budget.
