From Chinwendu Obienyi and Adanna Nnamani, Abuja
Nigeria’s total public debt surged to N142.3 trillion as of September 30, 2024, reflecting an increase of 5.97 per cent (N8.02 trillion) compared to N134.3 trillion recorded in June 2024.
The rise, according to the latest data from the Debt Management Office (DMO), highlights the growing strain on the nation’s finances, fueled by escalating domestic borrowing and the adverse effects of exchange rate depreciation on external debt.
The DMO’s data reveals that while Nigeria’s external debt in dollar terms grew modestly by 0.29 per cent, from $42.90 billion in June to $43.03 billion in September, the naira equivalent of this external debt saw a dramatic spike of 9.22 per cent.
This surge pushed the naira value of external debt from N63.07 trillion to N68.89 trillion in the same period. The primary driver of this steep increase was the sharp depreciation of the naira, which weakened from N1,470.19/$ in June to N1,601.03/$ by the close of September.
The weakening naira against the dollar has significantly contributed to the increased burden of external debt. The depreciation means that Nigeria now owes more in naira terms for the same dollar-denominated loans, compounding the nation’s fiscal challenges.
The rising external debt in naira is a direct consequence of this exchange rate movement, placing additional pressure on the country’s economic stability.
On the domestic front, Nigeria’s domestic debt exhibited a mixed performance. In dollar terms, it declined by 5.34 per cent, from $48.45 billion in June to $45.87 billion in September.
However, in naira terms, domestic debt rose by 3.10 per cent, from N71.22 trillion to N73.43 trillion. The Federal Government accounted for the bulk of this increase, with its domestic debt rising from N66.96 trillion to N69.22 trillion during the period under review.
In contrast, the domestic debt of states and the Federal Capital Territory (FCT) experienced a slight decline, falling from N4.27 trillion to N4.21 trillion.
The Federal Government’s bond issuance remained the largest component of domestic debt, growing by 4.47% to N54.65 trillion in September, up from N52.32 trillion in June.
These bonds now make up 78.95% of the total domestic debt stock, an increase from 78.13% in the previous quarter.
The bulk of this growth was driven by the issuance of bonds in naira terms, though Nigeria also introduced its first domestic dollar-denominated bond, which added N1.47 trillion to the debt stock.
An analysis of Nigeria’s external debt stock of $43.03 billion in September 2024 reveals a relatively stable debt profile, with only minor adjustments observed across multilateral and bilateral obligations.
Multilateral debt saw a slight increase of 0.67%, rising to $21.77 billion, which continues to represent 50.60% of total external debt.
This increase was mainly driven by additional disbursements from institutions like the World Bank, which added $513.06 million to its International Development Association portfolio, now valued at $16.84 billion.
Bilateral loans, on the other hand, saw a small decline of 1.33%, falling from $5.89 billion to $5.81 billion.
Loans from China, Nigeria’s largest bilateral lender, decreased by $99.98 million, although obligations to France and Germany remained stable.
Commercial loans, primarily in the form of Eurobonds, remained unchanged at $15.12 billion, making up 35.14% of the total external debt.
According to experts, Nigeria’s rising public debt, both domestic and external, is a clear indication of the growing pressure on the nation’s fiscal framework.
The combined effects of increased domestic borrowing and the weakening naira are significantly raising the cost of servicing Nigeria’s debt, particularly in external obligations.
Moving forward, the government’s strategy will need to address these challenges and ensure that the nation’s borrowing is both sustainable and aligned with long-term economic growth objectives.