The cost of domestic debt service of the Federal Government stood at N977.03 billion at end-June 2021, representing an increase of 8.75% compared to N898.39 billion at end-June 2020.
This was disclosed by the Financial Markets Department of the Central Bank of Nigeria in its half-year activity report for 2021.
The Federal Government domestic debt stock outstanding witnessed an upward trend in the first half of 2021, compared with the corresponding period of 2020. As a result, the cost of debt service increased by 8.7%, owing to the increase in Federal Government borrowings to augment its revenue shortfall.
What the report is saying
- The Federal Government augmented its revenue shortfall with public financing. The stock of FGN domestic debt outstanding amounted to N17,631.80 billion at end-June 2021.
- This represented an increase of N2,176.10 billion or 14.08 per cent above N15,455.70 billion, recorded at end-June 2020.
- Consequently, the cost of debt service increased by 8.75 per cent to N977.03 billion at end-June 2021, from N898.39 billion at end-June 2020, due to the increase in borrowings by the Federal Government
- In the review period, FGN Bonds worth N900.00 billion was offered, while public subscription and sale stood at N1,726.40 billion and N1,415.00 billion, respectively (Table 5.6). The amount offered comprised new issues and re-openings of FGN Bonds.
- In the corresponding period of 2020, FGN Bonds issue, subscription and allotment were N615.00 billion, N2,449.97 billion and N1,308.58 billion, respectively. The increase in offer and allotment in the first half of 2021 was attributable to the government’s drive to fund fiscal deficit from the domestic market (Table 5.6).
- Consequently, the total value of FGN Bonds outstanding at end-June 2021 stood at N13,659.66 billion, compared with N11,673.84 billion at end-June 2020, indicating an increase of N1,985.83 billion or 17.01 per cent.
It added that the holding structure of the instrument indicated that Deposit Money Banks took up N1.25tn or 75.31%, while mandate and internal funds customers, including CBN branches accounted for the balance of N411.22 billion or 24.69%.