The value of domestic debt increased by 20.8 percent in the first quarter of 2022, Q1’22, almost at the same rate as foreign debt, which increased by 21.6 percent over the same period in 2021, suggesting that the Federal Government’s public debt structure is deviating from the target set under its National Development Plan, NDP, 2021–2025.
Domestic debt in Q1 of 22 was N20.114 trillion as opposed to N16.513 trillion in the same period of 2021, while the foreign component was N39.996 billion as opposed to N32.859 billion.
The amount of FGN bonds increased by 14.2%, from N12.465 trillion in the similar period of 2021 to N14.240 trillion over the period.
The 2021–2025 National Development Plan mandates that the Federal Government cut its domestic borrowing and a greater emphasis on foreign sources are reportedly done to make room in the money market for the private sector.
Tajudeen Olayinka, an investment banker and stockbroker, commented on the development: “It is in the interest of the economy to have more private sector businesses raise corporate bond and list their securities on securities exchanges in Nigeria, either to be admitted on an OTC Exchange or listed on a regular exchange, as against FGN bond dominating the scene. The essence of the 2021-2025 NDP is defeated as government has continued to borrow more in the domestic market.
“More listing by private sector is an indication of businesses having more access to long term capital. It is good to have it this way, because private sector capital formation tends to drive economy more towards attaining full employment output, at a lower level of inflation.
“But the level of private sector capital raising in Nigeria is still not encouraging, especially if one reflects on the level of capital raising in our market before the global meltdown of 2008/2009.”