The Federal Government has spent N1trn or $2.31bn to service Nigeria’s N44.06trn ($101.9trn) debt in the first two months of 2023.
The development is coming amid Nigeria’s revenue challenge leading to the downgrading of its credit ratings by Moody’s Investors.
According to the Debt Management Office, the N1trn was sourced through the N2.1trn FGN securities issued in January and February this year.
The government has issued the FGN Bonds, Nigerian Treasury Bills, and FGN Savings Bond where it raised N2.12trn.
The DMO said N1trn out of the amount raised was used to service the N44.06trn debt as of September 2022.
Nigeria is planning to spend N21.8trn in 2023 with a deficit component of N11.34trn while the FG has set a domestic deficit financing of N7.043trn.
“A total of N2.129trn has been raised January and February from the issuance of FGN Bond, Nigerian Treasury Bills, and FGN Savings Bond, only N1trn has been deployed for deficit financing, representing 14.2 percent of the total requirements of N7.043trn for this year,” the DMO said in a statement on its website.
But the DMO which is the body designated to issue securities on behalf of the government said N1.129trn of the amount will be used to settle maturing obligations.
DMO said, “It should be noted the balance of the funds raised is for refinancing maturing obligations.”
But the DMO said despite spending N1trn in two months, it is “always guided by the law and thus, cannot exceed the legally approved New Borrowing in the Appropriation Act.”
In January, Moody downgraded Nigeria’s long-term foreign-currency and local-currency issuer ratings as well as its foreign currency senior unsecured debt ratings to Caa1 from B3.
Moody rates debt obligation as Caa 1, which implies that such obligations are adjudged to be speculative of poor standing and are subject to very high credit risk.