Nigeria’s public debt has surged to N142.3 trillion by the end of the third quarter of 2024, reflecting an increase of N8.02 trillion (5.97%) compared to N134.3 trillion recorded in June 2024. This information was recently released by the Debt Management Office (DMO), highlighting the impact of domestic borrowing and currency depreciation on the country’s debt profile.
External Debt Surge Due to Naira Depreciation
The DMO report indicates that Nigeria’s external debt, when measured in U.S. dollars, experienced a slight increase of 0.29%, rising from $42.90 billion in June to $43.03 billion in September 2024. However, due to the naira’s depreciation—weakening from N1,470.19/$ to N1,601.03/$—the naira equivalent of external debt saw a significant rise of 9.22%, climbing from N63.07 trillion to N68.89 trillion during the period.
Domestic Debt Trends
Domestic debt presented a mixed performance. In dollar terms, it declined by 5.34%, dropping from $48.45 billion to $45.87 billion. However, when converted to naira, it increased by 3.10%, rising from N71.22 trillion to N73.43 trillion.
The Federal Government remains the largest domestic borrower, with its debt increasing from N66.96 trillion in June to N69.22 trillion in September, while debt owed by states and the Federal Capital Territory (FCT) showed a slight decline from N4.27 trillion to N4.21 trillion.
Composition of Domestic Debt
Federal Government bonds continue to dominate Nigeria’s domestic debt landscape, accounting for 78.95% of the total domestic debt stock, an increase from 78.13% in the previous quarter. Bonds rose by 4.47%, from N52.32 trillion to N54.65 trillion.
Other components of domestic debt include:
- Treasury Bills: Slight decline of 0.66% to N11.73 trillion.
- Promissory Notes: Increased by 5.80%, reaching N1.77 trillion.
- FGN Sukuk: Fell by 9.14% to N992.56 billion.
- Savings Bonds: Recorded a growth of 16.11%, totaling N64.09 billion.
External Debt Breakdown
An analysis of Nigeria’s external debt stock of $43.03 billion reveals stability, with minor adjustments in debt composition:
- Multilateral Debt: Increased by 0.67% to $21.77 billion, driven by disbursements from institutions like the World Bank.
- Bilateral Debt: Declined by 1.33%, largely due to reduced obligations to China, Nigeria’s largest bilateral lender.
- Commercial Loans: Remained unchanged at $15.12 billion, consisting primarily of Eurobonds.
Key Developments
Nigeria successfully raised $2.2 billion through a Eurobond issuance in December 2024 to finance the 2024 budget. The issuance comprised a 6.5-year bond of $700 million at 9.625% interest and a 10-year bond of $1.5 billion at 10.375% interest. Despite attracting over $9 billion in subscriptions, only $2.2 billion was accepted.
Debt Sustainability Concerns
The rising debt burden, coupled with continued currency depreciation and increased reliance on domestic borrowing, raises concerns about Nigeria’s debt sustainability. Experts warn that without significant revenue growth and prudent fiscal management, the country’s debt profile could pose long-term economic challenges.
