President Bola Tinubu’s administration borrowed N20.1 trillion from domestic investors in the first year, reflecting a substantial year-on-year increase of 117 percent from the previous period.
The increase in debt has sparked concerns about its potential economic impact, including heightened inflation, increased debt service costs, and elevated borrowing expenses for businesses.
Economists analyzed that the significant rise in the Federal Government’s borrowing could worsen the already high inflation in the country.
The action might also encourage the Central Bank of Nigeria, CBN, to raise interest rates further, resulting in higher borrowing costs for both businesses and individuals.
The Federal Government taps into domestic investors’ funds through various channels like FGN Bonds, FGN Savings Bonds, and Sukuk Bonds, managed by the Debt Management Office (DMO). Adding to the mix are Nigeria Treasury Bills (NTBs), handled by the Central Bank of Nigeria (CBN) on behalf of the FG.
NTB auctions, facilitated by the CBN, witnessed the majority of the borrowing surge. They made up 66 percent of the FG’s domestic borrowing during this period.
According to CBN data, the FG’s borrowing through NTBs surged year-on-year by 188 percent to N13.235 trillion in the 12 months ending May 2024, compared to N4.592 trillion in the preceding 12 months ending May 2023.