(http://www.punchng.com/business/business-economy/govt-borrowings-through-bonds-rise-by-n438bn/)


The Federal Government’s borrowings through bonds have increased by N438bn as at June 30, 2012.

Figures obtained from the website of the Debt Management Office showed that a total of N3.714tn was borrowed through FGN Bonds as at the end of the second quarter of this year, compared to N3.276tn recorded in the similar period of last year.

The N3.714tn, which makes up 60.37 per cent of the total domestic debt as of the second quarter of 2012, represents an increase of N438bn over the figure recorded in June of last year.

According to the statistics, borrowings through Treasury Bonds, however, stood at N353bn as of June 2012, slightly lower than the N372bn recorded in the similar period of 2011.

The Chief Executive Officer, Lambeth Trust and Investment Company Limited, Mr. David Adonri, who spoke to our correspondent on Tuesday, said the figures were on the rise owing to the Federal Government’s dependence on debt to fund major activities.

According to him, the situation is not good for the development of the country’s real sector, which is supposed to be more active than it is at present.

He explained that the escalating debt profile of the Federal Government had crowded out the real sector of the economy and the equities market.

Adonri said, “The implication is that the capital being formed by the way of debt is what the government is using to finance consumption and not investment. It is contributing next to nothing to the economy.

“It is an action that is destabilizing the economy by increasing interest rate and inflation rate. By increasing these two rates, the government is causing more problems for the economy.”

As of March 31, 2012, the N5.966tn domestic debt component of the total debt profile showed that FGN bonds accounted for N3.67tn or 61.44 per cent of Federal Government’s borrowings.

The Nigerian Treasury Bills accounted for N1.95tn or 32.63 per cent, while Treasury Bonds accounted for N353.73m or 5.93 per cent.

While presenting the 2012 budget proposal to the National Assembly, President Goodluck Jonathan had lamented that domestic debt had been growing at an alarming rate in recent years with the clearest evidence of this being that in 2012, the Federal Government earmarked N560bn for debt servicing.

The President had spoken of curtailing domestic debts, but gave room for the government to accumulate more debts with a caveat that the debts should not go beyond 30 per cent of Gross Domestic Product

When a person borrows large sum of money to entertain his friends, we need to question his character or get him checked up.