Nigeria’s public debt stock has escalated to N134.3 trillion ($91.3 billion) as of the end of the second quarter of 2024. This marks a significant increase of 10.35% from N121.7 trillion ($91.5 billion) recorded in the first quarter, as reported by the Debt Management Office (DMO).
An exclusive document from the Ministry of Finance obtained by Nairametrics reveals that this rise is primarily attributed to the devaluation of the naira, underscoring persistent challenges related to exchange rate fluctuations.
Read Also: BRICS Expands to 13 New Countries as Nigeria’s Inclusion Sparks Controversy
The document states, “In Q2 2024, the debt stock grew in naira terms to N134.3 trillion from N121.7 trillion in Q1 2024, driven mainly by exchange rate devaluation. The dollar amount of debt was roughly the same.” This indicates that while the total debt has increased in naira, its dollar value has remained stable, reflecting the effects of currency dynamics on debt valuation.
Domestic and External Debt Analysis
Within the debt structure, domestic debt constitutes 53% of the total, amounting to N71.2 trillion ($48.4 billion), while external debt represents 47%, or N63.1 trillion ($42.9 billion). Notably, Nigeria’s debt-to-GDP ratio continues to rise, now exceeding 50%, raising concerns regarding fiscal sustainability.
Pay Attention To: Tinubu Appoints Former NFF Official Shehu Dikko, Dismissed Over Corruption Allegations, as Sports Commission DG
FGN Bonds, which comprise 78% of domestic debt, highlight the government’s reliance on local bond markets for funding. Other instruments in the domestic portfolio include Nigerian Treasury Bills, Savings Bonds, Sukuk, Promissory Notes, and Green Bonds, illustrating a diverse borrowing strategy.
On the external front, multilateral loans account for the largest segment of external debt at 50.4%, with bilateral loans and commercial loans contributing 13.7% and 35.9%, respectively. This balance between concessional and market-based borrowing allows Nigeria to effectively manage its debt obligations while navigating the complexities of global financial markets.
Continued Activity in the Debt Market
During a recent press conference at the IMF/World Bank annual meetings in Washington D.C., Tobias Adrian, the IMF’s financial counsellor, noted that Nigeria and other frontier markets have remained active in the debt market throughout 2024, despite increased financing costs compared to pre-2021 levels. He stated, “Frontier markets, including Nigeria, have been active in the debt market this year, and though access to financing is still more expensive than before, the overall issuance levels have been encouraging.”
Additionally, the Ministry of Finance announced that Mr Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, will advocate for adequate and affordable financing to support Nigeria’s ongoing reforms. The statement highlighted that Edun would lead discussions aimed at bolstering Nigeria’s economic resilience, particularly in light of the nation’s structural adjustments.
Recent reports indicate that Nigeria’s debt servicing payments surged by 69% in the first half of 2024, reaching N6.04 trillion, a significant increase from N3.58 trillion in the same period of 2023. This sharp rise in debt service obligations, driven largely by naira devaluation affecting foreign debt repayments, reflects a mounting burden on the Federal Government, with debt repayment consuming a considerable portion of its financial resources. Data from the Central Bank of Nigeria (CBN) reveals that debt service in H1 2024 constituted 50% of the total expenditure of N12.17 trillion and an astonishing 162% of the N3.73 trillion total revenue generated during this timeframe.
Stay informed with Ejes Gist News – Your Source for Credible News in Nigeria.
