Nigeria’s Treasury Bills (T-Bills) debt has soared to N10.4 trillion, marking a 60% increase in just three months, according to the Debt Management Office (DMO) data.
This sets a new record for Nigeria’s highest T-Bills debt balance since at least 2010, based on Nairalytics’ analysis of central bank records.
The DMO, through the central bank, has conducted multiple Treasury Bills auctions in the first half of 2024. These auctions are crucial for managing inflation and financing short-term government expenditures.
Under the All Progressives Congress (APC) government, T-Bills have become a primary source of short-term funding, expanding significantly from N2.8 trillion during the Peoples Democratic Party (PDP) era under Goodluck Jonathan to the current N10.4 trillion.
As of December 2023, Nigeria’s Treasury Bills stood at N6.5 trillion, representing 11% of the domestic debt portfolio. By March 2024, this figure surged to N10.4 trillion, comprising 16% of the total domestic debt.
This translates to T-Bills debt accounting for 4.37% of Nigeria’s Gross Domestic Product (GDP).
In the first quarter of 2024 alone, the central bank offered N2.1 trillion in Treasury Bills, attracting a massive subscription of N21.7 trillion from yield-seeking investors.
Despite offering N5.64 trillion in total, yields spiked up to 21.1% in Q1 2024, prompting investors to shift funds from equities to fixed-income securities.
A further N1.64 trillion in Treasury Bills auctions was scheduled for Q2 2024, mainly to roll over maturing bills, ensuring continuity rather than repayment.
Under the Bola Tinubu administration, Nigeria has increasingly relied on domestic debt markets, especially T-Bills, for short-term funding, contrasting with the previous administration’s preference for Central Bank’s Ways and Means Advances.
The fiscal shortfall in government revenues has exacerbated reliance on public debt, with the central bank, under Yemi Cardoso, employing high interest rates to attract T-Bill buyers.
Despite oversubscriptions in most auctions, concerns persist over the rising cost of servicing Nigeria’s domestic debt, with actual yields nearing 30% per annum.
Moreover, Nigeria’s total domestic debt climbed to N65.6 trillion in Q1 2024, up 11% from December 2023, while external debt slightly declined to $42.1 billion due to reduced IMF debt.
Overall, Nigeria’s public debt amounts to N114.7 trillion in naira terms or $92.2 billion in dollar terms, surpassing the self-imposed debt-to-GDP limit of 40%.
The DMO attributes much of the debt surge in naira terms to currency devaluation, with only N7.71 trillion borrowed domestically in Q1 2024.
Rising debt levels have raised concerns about increased interest payments, potentially consuming a larger share of Nigeria’s declining revenue, as highlighted by Moody’s and PricewaterhouseCoopers (PwC) warnings on the country’s debt trajectory.