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2023: FG borrowed N3.17tr in three months



2023: FG borrowed N3.17tr in three months

According to documents, the Federal Government borrowed more than N3.17 trillion in the first quarter. The government issued regular bonds, retail savings bonds, and treasury bills at the domestic capital market to generate N3.17 trillion over the last three months, according to data obtained by The Nation Economic Intelligence.

In the fourth quarter of last year, the government’s borrowings more than doubled. It continued to be the biggest debt issuance in the previous ten quarters that The Nation crew had been tracking.

The statistics showed that borrowings increased month after month in the first quarter of this year, with the government generally increasing the size of its initial offers to make up for over subscriptions.

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.

With sovereign downgrades by global rating agencies and attendant higher risk profile as well as 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.

Open Letter

The government raised N770.56 billion in February through bond auction, 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.

Managing Director, 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 Chartered Institute of Stockbrokers (CIS), said: “Well, if you look at the debt to GDP ratio, it was approximately 37.35 per cent 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.

“As for the restructuring I doubt if we will get the magnanimity which we got during President Obasanjo’s administration in terms of debt forgiveness looking at some of our creditors such as China.”

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 budget deficit but also refinance federal government’s maturing obligations during the fiscal year.


According to the DMO, funds raised are deployed for deficit financing as well as refinancing maturing obligations. The DMO last week published its official national debt position indicating that Nigeria’s total public debt stood at N46.25 trillion by the end of fourth quarter 2022.

The government laid out a budget size of N20.51 trillion on a total revenue of N9.73 trillion in 2023, with plans to borrow N10.78 trillion in 2023.

At the presentation of the breakdown and highlights of this year’s budget proposal, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, said the overall budget deficit of N10.78 trillion would largely be financed through domestic loans.

She outlined that the budget deficit would be financed mainly by borrowings including domestic sources, N7.04 trillion; foreign sources, N1.76 trillion; multilateral and bi-lateral loan drawdowns, N1.77 billion and expected N206.18 billion proceeds from privatisation of national assets.

Ahmed had raised the possibility of higher budget deficit and financing in 2023, noting that “there is a continuing need to exceed this threshold considering the existential security challenges facing the country”.


She, however, said Nigeria has no plan to restructure its debt as government remains committed to meeting its domestic and external debt obligations.

According to her, the government will continue to utilise appropriate debt management tools to streamline the cost and risk profile in the debt portfolio, including through concessional loans, spreading out of debt maturities to avoid bunching, and re-profiling of the debt maturities by refinancing short-term debt using long-term debt instruments.

Nigeria has increasingly relied on borrowings to bridge its dwindling national revenue.

The data provided by the Budget Office of the Federation showed that Nigeria has consistently over the past eight years significantly underperformed its revenue target. For instance, while the country had budgeted a revenue target of N7.2 trillion in 2018, it generated only N3.9 trillion, about 54 per cent of revenue target. In 2019, it achieved about 59 per cent with revenue budget of N7 trillion and actual of N4.12 trillion.


The revenue target and actual stood at N5.4 trillion and N3.96 trillion and N6.64 trillion and N4.64 trillion in 2020 and 2021 respectively. In the current budget, while the country had set a revenue target of N5.82 billion, it only achieved 63 per cent or N3.66 trillion by July 2022.

Nigeria has been using more than three-quarters of its revenues to service debts. Debt-service to total revenue ratio stood at 61.3 per cent in 2020, rose to 90.9 per cent in 2021 and currently stands at 84.5 per cent. Debt-service-to-total revenue was about 32.7 per cent in 2015.

The DMO expressed concerns that the country now faces the risk of being unable to sustain its rising national public debts unless urgent actions are taken to curtail expenditure and increase the country’s revenues.

It warned that while Nigeria’s loans may still be within acceptable range of the country’s economic size, the country’s ability to sustainably meet the obligations on such loans is now under threat.


The Director-General, Debt Management Office, Ms. Patience Oniha, said beyond keeping within debt-to-GDP ratio, it is important that the public debt is sustainable and government is able to service its debt without the risk of distress.

Reviewing revenue budgets and actuals against actual debt service over the past eight years, Ms. Oniha said the debt service-to-revenue ratio is “high”.

She said dependence on borrowing and low revenue base were now threatening debt sustainability.

“Nigeria’s public debt stock has grown consistently over the past decades and even faster in recent years. Consequently, debt service has continued to grow,” Ms. Oniha said.


She pointed out that Nigeria’s low revenue base compounded by dependence on crude oil resulted in budget deficits over the past decades, putting pressure on the country’s debt sustainability.

“The outlook shows that both the local and international markets are becoming tighter and interest rates are rising, thus priority should be less on borrowing and more on revenues from oil and non-oil sources,” Ms. Oniha said.

She said while efforts at increasing non-oil revenue are yielding positive results, urgent actions are required to moderate the level of new borrowings and ensure that the public debt is sustainable.

The DG outlined that government should, as a matter of urgency, rationalise expenditure and accelerate the growth in revenues, including implementation of strategic actions to boost tax administration and efficiency.


She said it was unacceptable that Nigeria has the lowest revenue-to-GDP ratio among a list of country sampled by the World Bank noting that an efficient tax administration would ensure greater compliance to remittances devoid of all forms of evasions in the system.

According to her, most countries around the world have placed more emphasis on taxation as a principal source of funding for the government while reverse is the case in Nigeria.

Oniha also advised that “borrowing should be tied to projects and some of the projects should generate commensurate revenues to service loans used to finance them”.

She called for sale of government assets to unlock funding, adding that physical assets such as idle or underutilised properties could be redeveloped for commercialisation to generate revenue.

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