1 trillion from domestic investors in the first year of President Tinubu’s administration, representing a year-on-year YoY increase of 117 per cent from the previous year, prompting concerns over the impact on the economy including likely additional pressure on inflation, increased debt service cost and higher borrowing cost from businesses.
Most of the increase in borrowing was through the NTBs auctions conducted by the CBN, which also constituted 66 per cent of FG’s domestic borrowing during the period.According to data from CBN, FG’s borrowing through NTBs rose YoY by 188 per cent to N13.235 trillion in the 12 months ending May 2024 from N4.592 trillion in the 12 months ending May 2023.
As a result, the average interest rate on NTBs rose to 9.1 per cent in 12 months ending May 2024, representing 5.1 percentage points from 4.0 per cent in the preceding 12 months ending May 2023. “With respect to fiscal policy, we are yet to see the borrowing by the government have an impact on fiscal policy. Yes, we have the Coastal roads being built, but we would like to see more with regards to policies to help increase production output in the economy. Also, we expect to see a significant increase in debt servicing costs, factoring in the higher rates and increase in domestic borrowing.
She said: “The Federal Government’s domestic borrowing program has not changed in the last year. The government’s calendar for offering FGN bonds, savings bonds and Treasury bills remains consistent and in line with historical practice. “In terms of lending to the private sector: Higher interest rates on government securities, which are considered the safest instruments, is a disincentive to lending to the private sector, which is considered riskier.
“The increase in domestic borrowing values is indicative of the success of the administration’s monetary policy positioning.
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