The Debt Management Office (DMO) has clarified that Nigeria’s fresh borrowing for the first quarter of 2024 was N7.71 trillion, contrary to earlier reports suggesting a higher figure of N24.33 trillion. This clarification came through a recent press release from the DMO titled “Explaining the Q1 2024 Public Debt Data.”
Breakdown of Fresh Borrowing
The fresh borrowing comprises N2.81 trillion as part of the new domestic borrowing of N6.06 trillion included in the 2024 Appropriation Act and N4.90 trillion related to the securitization of the N7.3 trillion Ways and Means Advances approved by the National Assembly.
Impact of Naira Devaluation
The significant increase in the total debt stock to N121.67 trillion in Q1 2024, up from N97.34 trillion in Q4 2023, was largely due to the devaluation of the naira. The exchange rate depreciated from N899.39/$1 at the end of 2023 to N1,330.26/$1 in the first quarter of 2024, a 32.39% drop. This devaluation inflated the naira value of the external debt, despite the dollar amount remaining relatively stable.
Clarification on Debt Data
The DMO emphasized that the perceived increase of N24.33 trillion in the total debt stock is being misinterpreted as new borrowing. In reality, only N7.71 trillion represents new borrowing, while N16.62 trillion is attributed to the impact of naira devaluation.
The DMO explained, “The increase in Naira Terms of N24.33 trillion is being misinterpreted as New Borrowing. The amount actually represents New Borrowing of N2.81 trillion as part of the New Domestic Borrowing of N6.06 trillion provided in the 2024 Appropriation Act, New Domestic Borrowing of N4.90 trillion as part of the securitization of the N7.3 trillion Ways and Means Advances approved by the National Assembly, as well as the depreciation in the official Naira Exchange Rate from USD/899.39 in Q4, 2023 to USD/N1,330.26 in Q1, 2024.”
The DMO also noted that the total external debt stock remained almost flat in dollar terms, at USD42.50 billion in Q4 2023 and USD42.12 billion in Q1 2024. However, due to the naira’s devaluation, the naira value of external debt surged from N38.22 trillion to N56.02 trillion.
Efforts to attract foreign exchange inflows are expected to bolster external reserves and support the naira exchange rate, potentially mitigating some of these effects in the future.
Key Points to Note
– **Total Public Debt**: As of March 31, 2024, Nigeria’s total public debt stood at N121.67 trillion (approximately $91.46 billion).
– **Debt Composition**: This figure includes the combined domestic and external debts of the Federal Government of Nigeria (FGN), the thirty-six state governments, and the Federal Capital Territory (FCT).
– **Effect of Devaluation**: The total debt in dollar terms actually declined by $16.77 billion or 18.34% from the previous quarter.
– **Government Funding**: The federal government has raised N4.5 trillion out of the N6 trillion target in the 2024 budget, with domestic securities being a major source of funding.
The DMO’s Director General, Patience Oniha, emphasized the importance of understanding these dynamics and the impact of economic reforms on debt and service costs, highlighting ongoing efforts to manage Nigeria’s public debt effectively.
