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FG N2.13 Trillion Domestic Borrowing is Partly to Refinance Maturing Obligations – DMO

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CEM REPORT, FINANCE | The Debt Management Office (DMO) has debunked the a report that Federal Government may have exceeded its domestic deficit funding requirement of N7.043 trillion in 2023 following the sum of N2.129 trillion borrowed between January and February 2023 through the issuance of Domestic FGN Securities.

DMO made this clarification Tuesday in a press statement, stating that out of the total of N2.129 trillion, from FGN Bonds, Nigerian Treasury Bills and FGN Savings Bond, only N1 trillion has been deployed for deficit financing which represent 14.2% of the total requirement of N7.043 trillion for the year.

DMO stated that the balance of N1.13 Trillion is for refinancing maturing obligations.

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DMO Statement Reads

“RE: FGN BORROWS N2.13 TRILLION IN 2 MONTHS

“The attention of the Debt Management Office (DMO) has been drawn to a report which stated that the Federal Government of Nigeria has raised the sum of N2.129 trillion between January and February 2023 through the issuance of Domestic FGN Securities. The Report further indicated that at this rate of borrowing, the Government may exceed its domestic deficit funding requirement of N7.043 trillion in 2023.

“The DMO wishes to clarify that the Domestic Issuance Programme is designed not only to provide funds to finance the Budget Deficit but to also refinance the FGN’s maturing obligations during the fiscal year.

“Thus, while a total of N2.129 trillion has been raised in January and February from issuances of FGN Bonds, Nigerian Treasury Bills and FGN Savings Bond, only N1 trillion has been deployed for deficit financing, representing 14.2% of the total requirement of N7.043 trillion for the year. It should be noted that the balance of the funds raised is for refinancing maturing obligations.

“While the DMO is maximizing the opportunity provided by the strong investor demand to raise funds to facilitate early implementation of the 2023 Budget, the DMO is always guided by the law and thus, cannot exceed the legally approved New Borrowing in the Appropriation Act.”

According to the latest report from Nigerian Bureau of Statistics, Nigeria’s total debt profile stood at N44,064 trillion in Q3 2022 from N42.84 trillion in Q2 2022. This represents a 2.84% increase from Q2 2022.

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Out of this total, external debt stood at N17.14 trillion while domestic debts stood at N26.91 trillion out of which FG owns 80.07%. The remaining 19.93% is owned by states led by Lagos state with N877.03 billion and followed by Delta State with N272.61 billion

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