The nine oil-producing states in Nigeria have experienced a noteworthy reduction in their domestic debt stock from a record high of N1.66 trillion in June 2023 to N1.58 trillion by the end of September 2023, marking a three-month decline of N107.6 billion. This analysis is based on data from the Debt Management Office (DMO), reflecting positive fiscal management within the mentioned period.
The reduction in domestic debt comes despite a challenging economic environment, and the states received a sum of N127.7 billion as a 13% oil derivatives fund from the federal government during the same period. This amount is considerably lower than the N249.6 billion received in the previous quarter.
The breakdown of the data by the DMO shows that while federal government domestic debt slightly increased, the domestic debt of the oil-producing states, including the Federal Capital Territory, experienced a marginal drop from N5.81 trillion to N5.744 trillion.
On a year-to-date basis, the nine states’ domestic debt profile increased by N88.69 billion, with Delta State leading in both the highest debt profile and the largest decline in nominal value. Delta State recorded a domestic debt of N371.5 billion, accounting for 24% of the total, but also marked a reduction of N93.92 billion from the previous quarter.
Rivers State, Imo State, Akwa Ibom State, and others also saw changes in their domestic debt profiles, reflecting varying fiscal strategies and economic dynamics.
This commendable reduction in domestic debt among Nigerian oil-producing states highlights an improved capacity to manage and settle loans, emphasizing the importance of comprehensive frameworks for boosting internally generated revenue. Such strategies contribute not only to debt reduction but also guide fund allocations towards essential infrastructural projects for overall state development.