FG Begins Domestic Borrowing To Finance 2019 Budget Deficit, Targets N480bn In Q3

FG Begins Domestic Borrowing To Finance 2019 Budget Deficit, Targets N480bn In Q3

The Federal Government plans to raise between N360 billion and N480 billion in local currency-denominated bonds with maturities rang­ing between five and 30 years in the third quarter of the year, the Debt Management Office said on Thursday.

This is the first borrowing plan since the passage of the 2019 Budget which has a defi­cit of N1.918 trillion.

The DMO in its FGN Bonds Issuance Calendar for the third quarter, 2019 re­leased in Abuja, said it would auction between N35 billion and N45 billion in five-year paper in July, along with N45 billion to N55 billon worth in 10-year debt and N40 billion to N60 billion in 30-year bonds.

In August, the debt office plans to issue between N35 billion and N45 billion in five-year paper; N45 billion to N55 billon worth in 10- year debt and N40 billion to N60 billion in 30-year bonds.

In its latest bond issuance calendar, the debt office also said it will in September raise between N35 billion and N45 billion in five-year; N45 billion to N55 billon worth in 10-year debt and N40 billion to N60 billion in 30-year bonds.

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The five-year bonds matur­ing in April 2023 will attract a 12.7 percent interest rate, while the 10-year and 30-year bonds maturing by April 2019 and April 2049 will attract in­terest rates of 14.55 percent and 14.8 percent respectively.

The Federal Government said all were re-openings of those previously issued.

The country issues sover­eign bonds monthly to sup­port the local bond market to create a benchmark for corporate issuance and fund its budget deficit.

The Federal Government had said it will borrow about N802.8 billion locally to fi­nance part of the N1.918 tril­lion deficits in its 2019 budget.

Details of the signed 2019 Appropriation Act also indi­cates that the federal govern­ment plans borrow another N802.8 billion from the for­eign debt market bringing total planned domestic and external borrowings to N1.605 trillion.

It was however unclear how the federal government plans to finance the balance of N313 billion budget defi­cits, which analysts forecast say would be much higher than that in view of falling actual revenues.