The federal government has increased borrowing from local investors by 21 per cent in the first half of2022 to N4.2 trillion from the N3.89 trillion it borrowed in the previous quarter.
Te implication is that the Federal Government spends N1.4 trillion of money borrowed from private investors. This is outside other money from other sources it spends.
Investors are comfortable lending to the government because its more guarantee than most investments.
The increased borrowing was driven by a 30 per cent increase in FGN Bond sales, 49 per cent increase in FGN Savings Bonds sales and about 14 per cent increase in borrowing through the Nigeria Treasury Bills, NTBs during the six months period, said Economic Confidential.
Findings from bond auctions results showed that the amount of FGN bonds sold in the first half of 20’22, rose to N1.84 trillion from N1.42 trillion in the first half of 2021, representing a 30 per cent, Year-on-Year (YoY) increase.
Further analysis showed that the amounts of FGN bonds offered by the Debt Management Office (DMO) rose by 25 per cent Year-on-Year (YoY) to N1.13 trillion in the first half of 2022 from N900 billion in the first half of 2021.
Similarly, total subscription, representing demand by investors, rose by 69 per cent YoY to N3.02 trillion in the first half of 2022 from N1.79 trillion in the first half of 2021. This resulted in 168 per cent oversubscription up from 99 per cent recorded in H1’21.
Total allotment rose by 38 per cent to N1.56 trillion in the first half of 2022 from N1.12 trillion in the firs half of 2021.
During the six months period (first half of 2022) the DMO sold two tenors of FGN Bonds namely 10-years bonds and 20-years bonds.
The DMO offered N675 billion worth of 10-years bonds which attracted public subscription of N1.312 trillion, resulting in 94 per cent over subscription, while the total amount sold stood at N919.45 trillion.