Analysis of the Treasury Bills issued by the Central Bank of Nigeria (CBN) on behalf of the Federal Government revealed that the Federal Government borrowed N3.2 trillion from the investing public through TBs in 2020, while it paid N253 billion as interest on TB borrowings from January to September 2020.
When compared with the N3.13 trillion borrowed through the instrument in 2019, this represents marginal increase of 1.9 per cent year-on-year.
The amount borrowed in 2020 represents 84 per cent of the N3.71 trillion treasury bills borrowing that matured and were repaid in 2020. The matured TBs repaid rose by 19 per cent year-on-year to N3.71 trillion in 2020 from N3.12 trillion in 2019.
Further analysis showed that the Federal Government borrowed N922.3 billion the first quarter of 2020, representing 29 per cent, quarter-on-quarter increase when compared with the N716.26 billion borrowed in the fourth quarter of 2019.
The Federal Government however borrowed less in the second quarter of the year 2020 as the number of TBs sold dropped by 36 per cent to N593.7 billion.
The volume spiked in the third quarter of 2020, as the TBs sold on behalf of the FG shot up by 68 per cent quarter-on-quarter, to N1 trillion, before falling by 39 per cent, to N614 billion in the last quarter of 2020.
Analysis of matured TBs repaid showed that FG repaid N1.27 trillion in first quarter of 2020. However, matured TBs repaid dropped by 63 per cent in the second quarter of the year to N470.6 billion.
The amount of TBs repaid picked up by 134 percent, in the third quarter to N1.1 trillion before falling by 21 percent, to N864.4 billion in the last quarter of the year 2020.
It was further revealed that the N3.2 trillion borrowed by the FG through TBs in 2020 represents 60 per cent more that the N2 trillion borrowed through the monthly FGN Bond sale by the Debt Management Office (DMO). This reflects the impact of sharp fall in yields on TBs on the borrowing activities of the Federal Government from the domestic market in 2020.
The average interest rate on freshly issued TBs also known as Primary Market bill fell to 0.09 per cent in December 2020 from 4.8 per cent in December 2019. This represents 4,746 basis points (bpts) decline. It was compounded by the exclusion of local investors from the secondary market (Open Market Operations) TBs.
As a result of the above stated facts, FG paid less interest on TBs borrowing in the nine months ended September 2020. Data obtained from DMO showed that the FG paid N253 billion as interest on TB borrowing from January to September 2020, down by 6.6 per cent from N271 billion paid in the corresponding period of 2019.