Nigeria’s total public debt rose to N142.3 trillion by September 30, 2024, marking a 5.97% increase (N8.02 trillion) from N134.3 trillion in June, data from the Debt Management Office (DMO) has revealed.
The DMO data indicated that Nigeria’s external debt in dollar terms increased marginally by 0.29%, from $42.90 billion in June to $43.03 billion in September. However, in naira terms, the external debt surged by 9.22%, rising from N63.07 trillion to N68.89 trillion during the same period.
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This sharp increase was attributed to the weakening of the naira, with the exchange rate declining from N1,470.19/$ to N1,601.03/$.
Conversely, domestic debt in dollar terms dropped by 5.34%, from $48.45 billion to $45.87 billion. Nonetheless, in naira terms, domestic debt rose by 3.10%, increasing from N71.22 trillion to N73.43 trillion.
Federal government’s debt obligations
Federal Government external debt rose from $38.01 billion in June to $38.12 billion in September, while states and the Federal Capital Territory (FCT) recorded an increase from $4.89 billion to $4.91 billion. On the domestic side, federal obligations rose from N66.96 trillion to N69.22 trillion, while states and the FCT saw a slight decline from N4.27 trillion to N4.21 trillion.
The rising naira-denominated debt has raised concerns about debt sustainability. Dr. Muda Yusuf, CEO of the Centre for the Promotion of Public Enterprises, emphasized the need for caution. “We need to monitor the growth of our public debt, as rising debt service obligations could create macroeconomic challenges,” he warned.
Domestic borrowing and bond market dynamics
The federal government continues to rely on domestic borrowing, driven by increased issuance of Federal Government bonds and promissory notes. Bonds remained the largest domestic debt component, increasing by 4.47% to N54.65 trillion, representing 78.95% of the domestic debt stock. The issuance of a new domestic dollar-denominated bond, adding N1.47 trillion, further boosted the debt.
Nigerian Treasury Bills, the second-largest domestic debt instrument, fell slightly by 0.66% to N11.73 trillion. Promissory notes rose by 5.80% to N1.77 trillion, while FGN Sukuk for infrastructure funding declined by 9.14% to N992.56 billion.
External debt overview
Multilateral debt rose by 0.67% to $21.77 billion, while bilateral loans decreased by 1.33%, with obligations to China falling by $99.98 million. Commercial loans, including Eurobonds, remained steady at $15.12 billion, representing 35.14% of external debt.
The naira’s depreciation exacerbated the burden of external debt in local currency terms. Nigeria raised $2.2 billion through Eurobonds in December 2023, with the funds earmarked to support the 2024 budget.
Government reforms and economic outlook
Minister of Budget and Economic Planning Abubakar Bagudu highlighted the government’s commitment to reforms, including the removal of fuel and forex subsidies, which have improved liquidity at the state level. He emphasized the importance of innovative financing to fund critical infrastructure and achieve the administration’s economic goals.
“President Bola Tinubu has steered the economy in the right direction, and we are determined to stay the course,” Bagudu told lawmakers.
The minister urged the National Assembly to pass tax reform bills, targeting an 18% revenue-to-GDP ratio. He noted that strengthened bilateral relations with key partners would further support Nigeria’s economic development agenda.
