FG cuts Ways and Means debt by N613bn

The Federal Government’s securitised Ways and Means debt fell by N613.34bn in the second quarter of 2026, recording its first decline since the obligation entered Nigeria’s public debt stock in 2023.

Figures from the Debt Management Office showed that the balance declined by 2.70 per cent from N22.719tn in March to N22.106tn at the end of June. The reduction coincided with the expiration of the three-year moratorium on principal repayment agreed during the securitisation.

Ways and Means Advances are temporary facilities granted by the Central Bank of Nigeria to the Federal Government to cover revenue shortfalls.

The outstanding sum represented 25.41 per cent of the Federal Government’s N86.999tn domestic debt and 34.09 per cent of the N64.839tn FGN bond portfolio at the end of June.

FGN bonds comprised N41.468tn in conventional naira bonds, N22.106tn in securitised Ways and Means and N1.265tn in domestic dollar bonds.

Despite the decline in the CBN-linked obligation, Nigeria’s public debt surged by June 2026. Fresh figures from the Debt Management Office showed that Nigeria’s total public debt rose by N14.39tn within one year, from N152.40tn in June 2025 to N166.79tn at the end of June 2026. That represented an increase of 9.44 per cent year-on-year.

Measured in dollars, however, the expansion was considerably larger. Public debt jumped by $21.27bn, or 21.35 per cent, from $99.66bn to $120.93bn over the same period.

The divergence reflects, among other factors, the stronger naira used in valuing the June 2026 external debt. The DMO applied an official exchange rate of N1,379.1842/$ in June 2026, compared with N1,529.2105/$ a year earlier. Consequently, dollar-denominated debt rose much faster than its naira equivalent.

On a quarterly basis, the debt stock increased by N7.44tn, or 4.67 per cent, from N159.35tn in March 2026 to N166.79tn in June. In dollar terms, it rose by $5.98bn, or 5.20 per cent, from $114.95bn at the end of March.

The June figures show that domestic liabilities remained the larger component of the debt portfolio. Domestic debt stood at N91.59tn, representing 54.91 per cent of total public debt, while external debt amounted to N75.20tn, or 45.09 per cent.

Domestic debt increased by N11.04tn, or 13.70 per cent, from N80.55tn in June 2025. In dollar terms, it climbed 26.07 per cent from $52.67bn to $66.41bn. Between March and June 2026 alone, domestic debt rose by N4.19tn, or 4.79 per cent, from N87.40tn.

External debt moved from $46.98bn in June 2025 to $54.52bn in June 2026, an increase of $7.54bn, or 16.05 per cent. Its naira value, however, rose by only N3.35tn, or 4.66 per cent, from N71.85tn to N75.20tn because of the exchange-rate effect.

Quarter-on-quarter, external debt increased by $2.62bn, or 5.05 per cent, from $51.90bn in March to $54.52bn in June. Its naira equivalent increased by N3.25tn, or 4.51 per cent.

The Federal Government remained responsible for the overwhelming majority of the portfolio. Its domestic debt stood at N87tn in June, while states and the FCT owed N4.59tn domestically. Federal Government external liabilities were N65.77tn, compared with N9.42tn owed externally by states and the FCT.

A closer examination of the Federal Government’s domestic liabilities shows that the growth was increasingly driven by Treasury bills and conventional naira bonds.

FGN domestic debt rose from N76.59tn in June 2025 to N87tn in June 2026, an increase of N10.41tn, or 13.60 per cent. It also increased by N4.12tn, or 4.97 per cent, in the second quarter alone.

FGN bonds remained the dominant instrument at N64.84tn, accounting for 74.53 per cent of Federal Government domestic debt. The figure included N41.47tn in conventional naira bonds, N22.11tn in securitised Ways and Means advances and N1.27tn in domestic dollar bonds.

But Treasury bills recorded the sharpest absolute expansion. Outstanding Nigerian Treasury Bills jumped from N12.76tn in June 2025 to N19.48tn in June 2026, an increase of N6.72tn, or 52.64 per cent, within one year. Their share of Federal Government domestic debt consequently rose from 16.67 per cent to 22.39 per cent.

The increase was also concentrated in the second quarter. Treasury bills rose by N2.92tn, or 17.60 per cent, from N16.57tn in March to N19.48tn in June.

Conventional FGN naira bonds increased by N4.94tn, or 13.54 per cent, year-on-year to N41.47tn and by N2tn, or 5.08 per cent, between March and June. Promissory notes also fell substantially, dropping from N1.73tn in June 2025 to N1.22tn in June 2026, a 29.81 per cent reduction.

FGN Savings Bonds, by contrast, rose 33.78 per cent from N91.53bn to N122.45bn, although they still represented just 0.14 per cent of domestic Federal Government debt.

Ways and Means Advances, as earlier stated, are temporary facilities granted by the Central Bank of Nigeria to the Federal Government to cover revenue shortfalls.

Section 38 of the CBN Act limits such advances to five per cent of the government’s actual revenue in the preceding year. It also requires them to be repaid as soon as possible and, in any event, by the end of the financial year in which they were granted.

The reliance of late former President Muhammadu Buhari’s administration on the facility caused the balance to exceed the statutory ceiling. Following presidential and National Assembly approvals in May 2023, N22.719tn of the advances was converted into long-term government securities issued to the CBN.

The securities carry a 40-year tenor and a nine per cent annual interest rate. The principal is to be amortised over 37 years after the initial moratorium.

In the Monetary, Credit, Foreign Trade, and Exchange Policy Guidelines for the Fiscal Years 2024-2025, the Central Bank of Nigeria confirmed that it will sustain its Ways and Means Advances to the Federal Government at a five per cent limit.

The document read, “Ways and Means Advances shall continue to be available to the Federal Government to finance deficits in its budgetary operations to a maximum of 5.0 per cent of the previous year’s actual collected revenue. Such advances shall be liquidated as soon as possible and shall in any event be repayable at the end of the year in which it was granted.”(Punch)