FCT, 36 States’ domestic debt swells by N198.96bn in 3 months

By Uche Usim

The domestic debt of the 36 states and the Federal Capital Territory (FCT) swelled by N198.96 billion in three months, the latest subnational debt report released by the Debt Management Office (DMO) has revealed.

In a broader analysis, the total domestic debt of states and the FCT rose by 5 percent from N4.07 trillion in March 2024 to N4.27 trillion by June 2024.

Debt levels across the states showed diverse trends, with some states witnessing sharp increases, while others saw only modest changes or even slight reductions.

Rivers State saw the highest percentage increase in debt during the review period, with its debt rising by 67 percent, from N232.58 billion in March to N389.20 billion in June, an increase of N156.62 billion. Similarly, Taraba State’s debt surged by 160 percent, climbing from N32.64 billion to N84.72 billion, a difference of N52.08 billion.

Niger State recorded a 70 percent increase, with its debt rising by N60.22 billion from N86.07 billion in March to N146.29 billion by June. These sharp increases reflect a significant dependence on borrowing to finance government projects and other responsibilities, raising concerns over the long-term sustainability of such debt levels.

Lagos State, still burdened with the highest debt among the states, saw a 5 percent decrease in its debt stock. The state’s domestic debt dropped from N929.41 billion in March to N885.99 billion in June, marking a reduction of N43.42 billion.

Meanwhile, states like Benue, Kwara, and Nasarawa experienced minimal fluctuations in their debt profiles. Benue’s debt rose by a modest N144.24 million, Kwara’s declined slightly by N23.12 million, and Nasarawa saw a small reduction of N187.64 million.

In contrast, Delta State made significant strides in reducing its debt, cutting its domestic debt by N30.36 billion, a 9 percent decrease, from N334.90 billion in March to N304.54 billion in June. Bayelsa and Ebonyi also achieved debt reductions of 6 percent and 9 percent, respectively.

Nigeria’s public debt stock rose to N134.3 trillion ($91.3 billion) by the end of the second quarter of 2024, reflecting a 10.35 percent increase from N121.7 trillion ($91.5 billion) in the first quarter, as reported by the Debt Management Office (DMO).

While the total debt increased in naira terms, the dollar value of the debt remained relatively unchanged, highlighting the influence of currency fluctuations on debt valuation.

The composition of Nigeria’s domestic and external debt reveals clear borrowing trends, with domestic debt continuing to dominate the public debt landscape in Q2 2024. Domestic debt accounted for 53 percent of the total, amounting to N71.2 trillion ($48.4 billion), while external debt made up 47 percent, totaling N63.1 trillion ($42.9 billion).