Nigeria’s Treasury Bill Debt Soars to Record High of N10.4 Trillion Nigeria’s treasury bill debt has reached an unprecedented level of N10.4 trillion, representing the highest balance in the country’s history. This alarming figure highlights the deepening fiscal challenges facing the nation. The issuance of treasury bills, short-term government securities, has been a primary source of borrowing for the Nigerian government in recent years. However, the reliance on this form of debt has now become unsustainable, with the country’s treasury bill stock rising by over 26% since the beginning of 2022. The factors contributing to this surge in treasury bill debt include: * Increased Government Expenditure: The government has been forced to borrow heavily to finance its rising expenditure, including infrastructure projects and social programs. * Revenue Shortfalls: Declining oil revenues and other fiscal challenges have led to a widening budget deficit, which has been filled through treasury bill issuance. * Low Interest Rates: Low interest rates have made it attractive for investors to purchase treasury bills, further fueling the government’s borrowing. The high level of treasury bill debt has several negative implications for the Nigerian economy: * Increased Debt Servicing Costs: Servicing the growing treasury bill debt consumes a significant portion of the government’s revenue, diverting funds from essential services. * Crowding Out of Private Sector Investment: The issuance of treasury bills competes with the private sector for funds, leading to higher interest rates and reduced investment. * Erosion of Fiscal Discipline: The unsustainable reliance on treasury bill borrowing risks eroding fiscal discipline and further worsening the country’s debt situation. The Nigerian government must take urgent steps to address this alarming trend. This could involve implementing fiscal reforms to reduce expenditure, increasing revenue through tax reforms, and exploring alternative sources of borrowing. Failure to address the unsustainable level of treasury bill debt could have severe consequences for Nigeria’s economy, including reduced economic growth, rising inflation, and a potential debt crisis.Nigeria’s Treasury Bill Debt Soars by 60% in Three MonthsNigeria’s Treasury Bill Debt Soars by 60% in Three Months According to data from the Debt Management Office (DMO), Nigeria’s total debt in Treasury Bills (T-Bills) has surged by 60% in just three months, reaching N10.4 trillion. This represents the highest T-Bill debt balance recorded since 2010. Central Bank’s Reliance on T-Bills The DMO has issued several T-Bill auctions in the first half of 2024 to finance government spending and combat inflation. T-Bills have become a major source of short-term funding for the government, particularly under the All Progressives Congress (APC). APC’s Debt Accumulation Under the APC, T-Bill debt has risen significantly, from N2.8 trillion during the People’s Democratic Party (PDP) government to N10.4 trillion currently. The majority of this debt was accumulated during the administration of Muhammadu Buhari. Impact on GDP Nigeria’s T-Bill debt now represents 4.37% of the gross domestic product (GDP). According to research by Nairalytics, the central bank offered N2.1 trillion in T-Bills in the first quarter of 2024, attracting a subscription of N21.7 trillion. Tinubunomics’ Debt Reliance The Bola Tinubu administration has primarily relied on domestic debt, especially T-Bills, to fund obligations. The central bank has used high interest rates to attract buyers of T-Bills. Rising Public Debt Nigeria’s total domestic debt profile has increased to N65.6 trillion in the first quarter of 2024, while its external debt profile has fallen slightly to $42.1 billion. The country’s public debt in naira terms is N114.7 trillion, exceeding its self-imposed debt/GDP limit of 40%. Concerns Raised Nigeria’s ballooning debt has raised concerns about increased interest payments and the potential impact on the country’s dwindling income. Moody’s Ratings has estimated that Nigeria’s interest expenses could consume 36% of government revenue in 2024.Nigerian Treasury Bill Debt Surges to Record High The Nigerian government’s Treasury bill (T-bill) debt has reached N10.4 trillion ($26.2 billion), marking the highest balance in the country’s history. This represents a significant increase from N9.4 trillion at the end of August 2022. The surge in T-bill debt is attributed to the government’s borrowing to finance its budget deficit, which has widened due to declining oil revenues and increased spending. The central bank has been issuing T-bills to absorb excess liquidity and curb inflation. Analysts have expressed concern over the rising T-bill debt, which could lead to higher interest rate payments and stifle economic growth. The government has been advised to explore alternative revenue sources and reduce its reliance on borrowing. Despite the debt concerns, the demand for T-bills remains strong, with investors seeking safe and short-term investment options. The government has maintained a good track record in servicing its debts, which has boosted investor confidence. The central bank has indicated that it will continue to use T-bills as a monetary policy tool to manage liquidity and support the government’s borrowing needs. However, it has warned that the government should prioritize fiscal discipline and sustainability.