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CBN: FG spent N1.02tn on debt servicing in Q3’21

Banks borrowed N503.69bn in OctoberKyari2023

The Federal Government spent a total of N1.02trillion on servicing the country’s debts in the third quarter of last year, the Central Bank of Nigeria (CBN) has said. The apex bank, which disclosed this in its Economic Report for the third quarter of 2021, released yesterday, said that the amount was N582.36billion (56.92 per cent) less than the N440.63 billion that the government expended on debt servicing in the previous quarter. According to the apex bank, the increase in FG’s debt servicing costs in Q3’ 21 compared with the previous quarter is as a result of the increase in the payment of Federal Government’s bonds and principal repayment of promissory notes. The bank said: “In the third quarter, public borrowing was hinged on the 2020 – 2023 Medium-Term Debt Strategy.

FGN debt outstanding rose to N33,805.84 billion at end-September 2021, an increase of 7.9 per cent, relative to end June 2021. The development was attributed to the drive to enhance economic recovery, reduce the infrastructural deficit, and fund COVID-19 mitigation programmes. “Domestic debt accounted for 53.9 per cent of FGN total debt, while external debt obligations constituted 46.1 per cent.

This fell short of the domestic-external debt target of 70:30 in the 2020- 2023 medium-term debt strategy of the FGN. “External debt stock grew by 13.6 per cent, while domestic debt outstanding rose by 3.4 per cent relative to end-June 2021. FGN bond issues remained dominant in the domestic debt portfolio, accounting for 73.8 per cent of the total domestic debt, followed by Treasury Bills (19.2 per cent); Promissory Notes (4.4 per cent); FGN Sukuk (2.0 per cent); and others (0.6 per cent). “The distribution was in tandem with the FGN’s objective to issue more long-term than short-term domestic debt instruments (75:25). In the composition of the external debt, Multilateral, Commercial and Bilateral loans accounted for 48.2 per cent, 38.6 per cent and 11.6 per cent of the total external debt stock, respectively, while promissory notes accounted for the balance of 1.6 per cent.

“Debt service obligations in the third quarter of 2021 amounted to N1,022.99 billion, compared with N440.63 billion in the second quarter of 2021. The increase was due, largely, to the rise in the payment of FGN Bonds and principal repayment of promissory notes.”

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