FG Loaned N3.17 Trillion In Three Months

Data obtained by the Nation Economic Intelligence has shown that the Federal Government borrowed N3.17 trillion in the first quarter of 2022.

The data indicated a consecutive monthly increase in borrowings in the first quarter of this year with the government raising its initial offer sizes in most instances to mop up oversubscriptions to its offers.

A month-on-month breakdown showed that the government raised a total of N940.62 billion in January. 

The government, which increased borrowings to N1.035 trillion in February, closed the quarter with N1.196 trillion.

The Managing Director of Arthur Steven Asset Management Limited, Mr. Olatunde Amolegbe, said the increase in debts had not led to improvement in the country’s economic profile. 

Amolegbe, a former president of the Chartered Institute of Stockbrokers (CIS), said: “Well if you look at the debt to GDP ratio, it was approximately 37.35 percent as of 2022. Most economists will frequently argue that there is no problem with increasing debt as long as it is put to useful use and will ultimately cite the case of Japan with a debt-to-GDP ratio of 221.32 percent.

"If you compute the CAGR, you will see that our debt profile increased by 24.30% while our GDP between 2015 and 2022 had a CAGR of -3.40 per cent If you look more closely, the debt to GDP ratio in 2015 was around 20.30 per cent while it was around 43.95% in 2022.

“Even though the GDP has been increasing recently, it seems to me that the debt-raising process was accelerated significantly without having a corresponding effect. I firmly believe that if we keep moving forward at this rate, a debt sustainability problem could develop.

“As a result, I will push for the government to take on more revenue-generating projects while also increasing its debt load, at least until the revenue issue is resolved. As an example, I supported the idea of tolling some of the federal government roadways.

With sovereign downgrades by global rating agencies and attendant higher risk profiles as well as the cost of international debt issuances, the government had been constrained to the domestic capital market to fund its budget deficit.

The government plans to raise N8.8 trillion through regular debt issuances to fund the N10.78 trillion 2023 budget deficit.

In January, the government raised N662.617 billion through its regular bond auction, N277.468 billion through the Nigerian Treasury Bills (NTBs), and N533.03 million through the Federal Government of Nigeria Savings Bonds (FGNSBs), a retail monthly debt issuance introduced in 2017.

The government raised N770.56 billion in February through bond auctions, N263.50 billion through NTBs, and N1.271 billion through the FGNSBs. 

The government issued regular bonds worth N563.36 billion, NTBs valued at  N631.84 billion, and FGNSBs worth N1.01 billion last month.

The Debt Management Office (DMO), which oversees government’s debt issuances and management, had said the domestic debt issuance was designed not only to provide funds to finance the budget deficit but also to refinance the federal government’s maturing obligations during the fiscal year.