FG’s domestic debt stock grew to N66.96trn in H1 2024
According to reports from the Debt Management Office (DMO), by the first half of 2024, the federal government’s domestic debt stock by instrument reached N66.957 trillion. Notably, this is an increase from the N61.578 trillion recorded at the end of Q1, marking an 8.74% increase.
During Q2 2024, the federal government incurred an additional debt of N5.379 trillion locally. The government did this through financial instruments such as FGN Bonds, Nigerian Treasury Bills (NTB), FGN Savings Bonds, and Promissory Notes, facilitated by the DMO and the Central Bank of Nigeria (CBN).
Meanwhile, at the end of December 2023, FG’s total domestic debt stood at N53.258 trillion. Compared to the N61.578 trillion recorded at the end of Q1 2024, there is a notable 15.62% increase.
What this no doubt indicates is the incursion of N8.32 trillion in additional debt within the first three months of the year, bringing to the fore a more aggressive borrowing pattern in Q1 compared to Q2 2024.
Number one driver is the government’s urgent need to finance the economy, propelled by a substantial budget deficit forecast of N9.1 trillion at the beginning of the year, equivalent to approximately 3.8% of GDP.
This same deficit forecast has since exceeded initial projections. This is because later in the year, a supplementary budget of N6.2 trillion was introduced.
Yet another driver is the reduction of excess money in circulation, an effort influenced by the Central Bank of Nigeria’s (CBN) strategy to curb inflation. One that was achieved by the CBN by continuously raising the monetary policy rate, providing an incentive for investors to purchase government securities, which are considered risk-free and offer tax-exempt returns.
Thus, the nation’s money supply (M3) grew by 56.32% year-on-year (YoY), reaching N101.461 trillion in June 2024, up from N64.906 trillion in June 2023.
Even more notably is the further increase recorded by the end of September 2024 – N108.954 trillion. But all these came with a downside –the substantial increase in the cost of servicing these borrowings.
