FG Spends N1.58tn On Debt Servicing In Six Months

The Federal Government spent a total of N1.58tn on domestic debt servicing in the first half of the year, data available from the Debt Management Office have shown.

In the first quarter of the year (January to March), the Federal Government spent a total of N923.3bn on servicing its domestic debt.

This amount is made up of N643.63bn which the government spent on the payment of interest charges and N279.67bn which it spent on redeeming Nigerian Treasury Bills that had matured.

In the second quarter, on the other hand, the government spent a total of N656.59bn on domestic debt servicing.

A breakdown of the spending in the second three months of the year shows that the government spent N359.23bn on redemption of Nigerian Treasury Bills and a total of N297.37 on payment of interest on domestic debt.

An analysis of the of the interest paid in the first quarter of the year showed that interest rate on FGN Bonds consumed a total of N411.8bn while interest payment on Sukuk Bond gulped a total of N8.17bn.

Furthermore, the government paid a total of N223.42bn as interest on Nigerian Treasury Bills and paid a total of N241.87m as interest on FGN Savings Bonds.

On the other hand, the Federal Government paid a total of N156.08bn as interest on Nigerian Treasury Bills in the second quarter of the year and N130.93 as interest charges on FGN Bonds.

Similarly, in the same second quarter, N9.38bn was paid as interest on Treasury Bonds; N257.69m was paid on as interest charges on FGN Savings Bond while N718.53m was paid as interest on the FGN Green Bond.

Economic experts believe the huge payment on debt servicing shows how far the country’s debt profile has risen over the years especially in the last three years.

This is especially true of the domestic debt where the Federal Government has been deploying a variety of instruments to raise funds required to shore up dwindling revenues.

At a recent press briefing, Director General of DMO, Patience Oniha, had hinged the rising debt profile on the need to continue offering government services despite the challenge of dwindling revenues from oil.

She also said that the government had not been borrowing frivolously as it had always obtained approval from the National Assembly before embarking on any borrowing exercise.

The DMO boss said, “If government didn’t borrow so much in the last three years, it wouldn’t have been able to function as a government.

“The huge borrowing became necessary following the fall in revenue from the fall in the price of crude and the attendant devaluation of the Naira from the use of the external reserve to defend the national currency.”

Oniha disclosed that the DMO had been able to raise a total of N410bn from the domestic debt market for funding capital projects that were captured in the in the 2018 Appropriation Act.

According to her, the amount is part of the N793bn that would be borrowed from the domestic market within the current financial year.

On foreign borrowing, she noted that the 2018 Appropriation Act approved for the borrowing of N850bn from the international debt market.