Government Shells Out N1.79 Trillion on Domestic Debt Service in Q3: DMO Report

The third quarter of 2023 witnessed significant financial activity on the part of the Federal Government of Nigeria, as reflected in the recently published domestic debt service report by the Debt Management Office (DMO). During this period, the government allocated a substantial sum of N1.79 trillion for servicing its domestic debt, marking a considerable uptick from the corresponding quarter in the previous year.

This financial commitment was distributed across various instruments, including Nigerian Treasury Bills (NTBs), Federal Government of Nigeria (FGN) bonds, treasury bonds, and FGN savings bonds. The meticulous breakdown of the domestic debt service for each month unveils the intricate web of financial transactions and obligations undertaken by the government.

Kicking off the quarter in July, the total domestic debt service amounted to N268.10 billion. This encompassed interest payments on NTBs, which accounted for N27.84 billion, FGN bonds interest payments totaling N240.08 billion, and FGN savings bonds interest payments reaching N178.51 billion. The breakdown offers a glimpse into the prioritization of various debt instruments in the government’s fiscal planning.

As the fiscal calendar progressed into August, the government’s financial obligations surged, resulting in a domestic debt service payment of N696.52 billion for the month. Notable components of this payment included N34.83 billion for NTBs, a substantial N661.42 billion for FGN bonds, and N262.56 billion for FGN savings bonds. The escalation in these figures between July and August underscores the dynamic nature of the government’s debt management strategy.

September witnessed further financial commitments, with the federal government making a substantial debt service payment of N827.84 billion. The distribution of this payment included N51.99 billion for NTBs, N739.11 billion for federal government bonds interest payments, and N8.3 billion allocated as rentals for FGN Sukuk bonds. The complexity of the government’s financial responsibilities is highlighted by the detailed breakdown of interest payments on FGN Savings bonds, Treasury bonds, and a principal payment of N25 billion during the month.

It is worth noting that the interest payment on FGN bonds for September was stated to include securitized Ways and Means for the month, with verification pending. Additionally, the DMO clarified that all FGN Securities that matured during the period were refinanced, except for Treasury Bonds and Promissory Notes with Sinking Fund provision, adding an extra layer of insight into the government’s financial maneuvers.

A broader perspective on the financial landscape reveals that the total domestic debt service payment of N1.79 trillion for Q3 2023 signifies a remarkable increase of 107.16% compared to the domestic debt service of N820.59 billion in Q3 2022. This substantial surge within a one-year period underscores the evolving financial dynamics and challenges faced by the government.

Moreover, a comparative analysis between Q2 and Q3 2023 showcases a notable escalation of 102.45% in the federal government’s total debt service payment. In Q2, the corresponding figure stood at N849.58 billion, emphasizing the rapid pace at which financial commitments are evolving. The surge in debt service payments over successive quarters indicates the government’s ongoing efforts to navigate fiscal challenges while meeting its financial obligations.

Zooming out to the cumulative figures for the first nine months of the year, the federal government’s expenditure on domestic debt service stands at an imposing N4.13 trillion. This substantial sum further emphasizes the magnitude of the financial commitments undertaken by the government in navigating the intricate landscape of domestic debt.

In conclusion, the detailed domestic debt service report for Q3 2023 provides a comprehensive glimpse into the financial intricacies of the Federal Government of Nigeria. The substantial increase in debt service payments compared to previous quarters and years reflects the evolving nature of fiscal challenges and underscores the government’s commitment to managing its financial responsibilities. As economic landscapes continue to shift, these insights into the government’s financial activities serve as a valuable resource for understanding the complex dynamics of debt management in the Nigerian context.