Surge in Government Debt Issuance Amid Inflation Risks

According to a report from Meristem Securities, government debt issuance has significantly increased due to inflation and liquidity risks. The report indicates that the fiscal authorities are frontloading borrowing early in the year to mitigate the impact of macroeconomic uncertainty.

The primary catalyst for this acceleration in borrowing is the revised national fiscal plan, which anticipates a government borrowing of ₦32 trillion for the 2026 budget, up from ₦18 trillion in 2025. The report highlights that net issuance in the first quarter of 2026 grew substantially, reaching ₦2.71 trillion compared to ₦348.52 billion in the same period in 2025.

Furthermore, the issuance of treasury bills and bonds is set to reach unprecedented levels, with plans for the largest single-month auction in June. Analysts from Meristem emphasize that this aggressive debt issuance is a defensive mechanism against worsening market conditions, particularly given the high inflation and uncertain borrowing costs.