Borrowing begins as DMO raises N67b for budget
The Debt Management Office (DMO), which disclosed the development, affirmed that it was part of the capital hunt for the 2018 Budget.
At the auction, the agency offered FGN Bonds in three tenors of five, seven and 10 years to give the nation’s diverse investor-base choices.
But an analysis of the transactions showed that investors preferred the 10-year bond, with a total subscription of N50.51 billion compared to the N40 billion that was offered.
The bonds were allotted at 13.69 per cent for the five-year; the seven-year got 14 per cent while 14.2999 per cent was assigned to the 10-year tenor.
The country has a fourth straight budget deficit estimated to be about N1.95 trillion for 2018.
This could push further the national debt stock and service bill significantly by the end of the year.
Going by history, no less than half of the deficit plan, approximating N1 trillion, will be financed by domestic borrowing, which has just begun.
The remainder is to be sourced from the local market.
Experts have said while there is nothing wrong in using budget deficit to stimulate the economy, the worries are, however, the subsisting modes of distribution of government expenditure.
The Managing Director of Cowry Asset Management Limited, Johnson Chukwu, told The Guardian that deficit budgeting targeted at the real sector is an effective tool to revive the economy.
But the challenge over the years has been the persistent increase in recurrent expenditure in absolute terms and unconvincing approaches in the implementation of capital votes.
An Abuja-based public affairs analyst, Jide Ojo, also expressed concern over what he described as “opaqueness in how much of the national borrowings is applied.
There are allegations that a sizeable portion of our loans ends up in private pockets or generally misapplied to non-priority projects.”
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