Nigeria’s public debt stock has surged to N134.3 trillion ($91.3 billion) as of the end of the second quarter of 2024, marking a 10.35% increase from N121.7 trillion ($91.5 billion) in the first quarter, according to the Debt Management Office.
An official document from the Ministry of Finance, indicates that this rise is primarily attributed to the devaluation of the naira, according to Nairametrics.
The report underscores the ongoing challenges posed by exchange rate volatility, which continues to impact the nation’s fiscal stability.
The document read, “In Q2 2024, the debt stock grew in naira terms to N134.3 trillion ($91.3 billion) from N121.7 trillion ($91.5 billion) in Q1 2024, driven mainly by exchange rate devaluation. The dollar amount of debt was roughly the same.”
While the total debt rose in naira terms, the dollar equivalent stayed relatively stable, emphasizing the influence of currency fluctuations on debt valuation. This scenario illustrates the challenges of managing public debt amid a volatile exchange rate environment.
Nigeria’s domestic and external debt portfolios indicate strategic borrowing trends, with domestic debt continuing to lead the public debt landscape in Q2 2024.
Domestic debt comprised 53% of the total, totaling N71.2 trillion ($48.4 billion), while external debt represented 47%, amounting to N63.1 trillion ($42.9 billion).
Additionally, the data reveals a growing debt-to-GDP ratio, which has now surpassed 50%, raising concerns about the country’s fiscal sustainability.
FGN Bonds represented a substantial 78% of Nigeria’s domestic debt, underscoring the government’s reliance on local bond markets. Other instruments in the domestic market include Nigerian Treasury Bills, Savings Bonds, Sukuk, Promissory Notes, and Green Bonds, indicating a variety of borrowing options for public financing.
On the external side, multilateral loans constituted the largest share, accounting for 50.4% of external debt.
This highlights Nigeria’s preference for borrowing from international financial institutions such as the World Bank and the African Development Bank.
Bilateral loans accounted for 13.7% of Nigeria’s external debt, while commercial loans made up 35.9%. These figures illustrate the balance between concessional financing and market-based borrowing, allowing Nigeria to manage its debt obligations while engaging with global financial markets.
The trend indicates that although Nigeria heavily relies on domestic borrowing to fund its budget and infrastructure projects, it also maintains a diversified external debt portfolio.
It was earlier reported that Nigeria’s debt servicing payments surged by 69% in the first half of 2024, reaching N6.04 trillion, compared to N3.58 trillion during the same period in 2023.
This sharp increase, likely driven by naira devaluation affecting foreign debt repayments, underscores the mounting burden on the Federal Government as debt repayment consumes a significant share of its financial resources.
Data from the Central Bank of Nigeria’s latest statistical bulletin reveals that debt service in H1 2024 accounted for 50% of total expenditures of N12.17 trillion and an alarming 162% of the N3.73 trillion total revenue generated during the same period.
