Nigeria’s public debt profile increased from N134.3 trillion in June 2024 to N142.32 trillion on September 30, 2024, according to the Debt Management Office (DMO).
With this most recent data, the projected debt stock per Nigerian might be around N656,514 when N142.32 trillion is divided by the estimated 216.78 million people living in the country.
In contrast to the N1,470.19/$1 it used on June 30, 2024, the DMO claimed that the debt stock consists of both domestic and foreign borrowings, implying that it converted the external debt to Naira using the Central Bank of Nigeria’s (CBN) official exchange rate of N1,601.028/$1 as of September 30, 2024.
Due to the impact of the naira’s depreciation against the dollar, Nigeria’s public debt increased from $91.35 billion in June 2024 to $88.89 billion in September 2024, indicating a greater debt profile.
Foreign debt increased from N63.07 trillion to N68.89 trillion, while domestic debt increased from N71.22 trillion to N73.43 trillion. Given the $2.2 billion Eurobond that the federal government issued in December of last year, it is probably going to increase even more by the fourth quarter.
The Federal Government of Nigeria (FGN) owes N69.22 trillion, while the 36 states and Federal Capital Territory (FCT) owe N4.21 trillion of the domestic debt stock, according to DMO data.
A quick glance at the debt stock shows that the FGN domestic debt stock rose from N66.96 trillion in June 2024 to N69.22 trillion in September 2024. This increased issue of FGN bonds and other fixed-income securities may have been the primary cause of this increase.
State and FCT debt stocks, however, fell from N4.27 trillion to N4.21 trillion over the review period.
Domestic debt has a weight of 51.60 percent higher than external debt, which is 48.40 percent, according to a further breakdown of the DMO’s data.
The DMO claims that all states and the Federal Capital Territory had domestic debt as of September 2024, with the exception of Cross Rivers State, which had it as of June 30, 2024.
With the exchange rate volatility raising the local currency cost of foreign obligations, the rising debt profile has raised concerns about Nigeria’s debt sustainability.
In view of limited foreign exchange reserves, the federal government’s increasing reliance on local markets to fund budget shortfalls is highlighted by the overall rise in domestic debt.
Economic observers are concerned about the risk that Nigerians face as a result of their debt, as the government is recommending N15.81 trillion for debt servicing in the estimated budget for 2024.
Ayo Teriba, the CEO of Economy Associates, stated that while borrowing is not illegal because the nation has significant infrastructure problems, it is improper to use borrowed funds to cover interest on unpaid obligations.
Most significantly, Nigerians are upset over the Tinubu-led government’s propensity to take on more loans while the nation struggles to pay off its debts and its crumbling infrastructure.
Despite these enormous debts, officials continue to lead extravagant lives, prioritizing long convoys over essential infrastructure like affordable housing, a good and accessible primary health center, and well-maintained roads.
Since interest payments take up a sizable amount of government revenue, financial analysts have frequently expressed doubts about the sustainability of the growing debt levels.
Nigeria spent more than 96% of its 2022 revenue on debt service, according to a World Bank analysis last year. The ongoing fiscal deficit has also made the nation’s public debt stock worse.
In addition to the World Bank, economic analysts maintain that Nigeria’s desire for Eurobonds exposes the country to increased currency risk due to the unstable exchange rate.
The interest rate we pay on the Eurobond is a commercial obligation, thus we should be concerned about it. Additionally, the interest rates on Treasury bills and Federal Government bonds are currently excessively high. From the perspective of debt servicing, these factors put a great deal of strain on government finances, Muda Yusuf, the former director-general of the Lagos Chamber of Commerce and Industry (LCCI) and the CEO of the Center for the Promotion of Private Enterprise (CPPE), stated.
Nigeria’s exposure to Eurobonds should be significantly decreased moving forward, Yusuf added, emphasizing how crucial this is.
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He emphasized, “I believe we need to be more careful about how quickly we take on these debts because more debt will lead to more difficulties with debt service commitments.”
The depreciation of the naira from N1,470.19/$ to N1,601.03/$ between June and September 2024 escalated the burden of external debt in local currency.
In the budget for 2025 that is presently being examined by the National Assembly, President Bola Tinubu has recommended a deficit of N13.08 trillion and debt servicing of N15.81 trillion.
The President presented the National Assembly with the N47.90 trillion 2025 budget in December 2024 for approval.
A revenue estimate of N34.82 trillion, an assumption of 2.06 million barrels per day (mbpd) of crude oil output, a 15% inflation rate, and a N1,500 naira-dollar exchange rate are all included in the proposed budget.
