By Munachimso Obienyi
The Federal government between January and November of 2022 borrowed a sum of N2.94 trillion through FGN Bond Market to finance the 2022 budget deficit, bond auction results released by the Debt Management Office (DMO) has revealed.
This represents an increase of 8.13 per cent over the N2.72 trillion borrowed to finance budget deficit between January and November of 2021.
The FGN bonds are debt securities of the Federal Government of Nigeria (FGN) issued by the DMO and it has the obligation to pay the bondholder the principal and agreed interest as and when due.
The bond market offers less volatility that assures Pension Funds Administrators (PFAs), and investors of their capital returns albeit with low yield on investment as the marginal rates on -Year Bond FGN Bonds that close the November 2022 auction was at 16.2 per cent, below 21.09 per cent inflation rate as of October 2022.
The Federal government had highlighted that the 2022 budget has debt deficit of N6.26trillion, forcing the government to issue new borrowings of N5.012 trillion (of which domestic – N2.506 trillion and foreign – N2.506 trillion); drawdowns on Project-tied Multilateral/Bilateral loans – N1.156 trillion; and Privatisation Proceeds of N90.73 billion.
