The Federal Government has borrowed N20.1 trillion from domestic investors in the first year of President Bola Tinubu’s administration, representing a year-on-year YoY increase of 117 percent from former President Muhammadu Buhari’s last year in office, according to analysts.
The borrowing was primarily done through the issuance of FGN Bonds, FGN Savings Bonds, and Sukuk Bonds by the Debt Management Office (DMO), as well as Nigeria Treasury Bills (NTBs) issued by the Central Bank of Nigeria (CBN) on behalf of the Federal Government.
The average Monetary Policy Rate (MPR) rose to 20.32% in the 12 months ending May 2024, leading to an increase in average interest rates on NTBs to 9.1%.
Analysts have expressed concerns that the increase in government borrowing could fuel inflationary pressures and lead to a crowding-out effect on private-sector lending.
While some believe that borrowing could limit inflation by mopping up liquidity, others argue that it may lead to further interest rate hikes and impact exchange rates.