Nigeria’s total public debt climbed to N142.3 trillion as of September 30, 2024, marking a 5.97 percent increase from N134.3 trillion in June 2024, according to the Debt Management Office (DMO). This surge underscores the country’s growing reliance on borrowing to finance budget deficits amidst a challenging economic environment.
The debt, which comprises external and domestic obligations, highlights the impact of exchange rate depreciation on external loans when converted to naira. External debt in dollar terms rose marginally by 0.29 percent from $42.90 billion in June to $43.03 billion in September. However, the depreciation of the naira from N1,470.19/$ to N1,601.03/$ during the quarter resulted in a sharp 9.22 percent increase in external debt in naira terms, from N63.07 trillion to N68.89 trillion.
Domestic debt in dollar terms fell by 5.34 percent, dropping from $48.45 billion in June to $45.87 billion in September. In contrast, domestic debt in naira terms rose by 3.10 percent, increasing from N71.22 trillion to N73.43 trillion over the same period.
The Federal Government accounted for the bulk of the debt, with its domestic obligations rising from N66.96 trillion in June to N69.22 trillion in September. State governments and the Federal Capital Territory (FCT) saw a slight decrease in their domestic debt, from N4.27 trillion to N4.21 trillion.
An analysis of the debt structure revealed that Federal Government bonds remain the largest component of domestic debt, growing by 4.47 percent to N54.65 trillion. The issuance of Nigeria’s first-ever domestic dollar-denominated bond added N1.47 trillion to the domestic debt stock, reflecting increased investor confidence in the local capital market.
Meanwhile, the government’s reliance on short-term instruments like Treasury Bills declined marginally, falling by 0.66 percent to N11.73 trillion, as authorities sought to mitigate refinancing risks. Promissory notes grew by 5.80 percent to N1.77 trillion, while FGN Sukuk bonds, primarily used for infrastructure funding, decreased by 9.14 percent to N992.56 billion.
Economic analysts have raised concerns about the sustainability of Nigeria’s rising debt levels, with interest payments consuming a significant portion of government revenue. Dr. Muda Yusuf, CEO of the Centre for the Promotion of Public Enterprises, warned that unchecked borrowing could plunge the country into a debt trap.
“There’s a need to reduce exposure to foreign debts, especially given the exchange rate depreciation, which inflates the naira cost of external obligations,” Yusuf said.
The Federal Government, however, remains optimistic about its economic reforms under President Bola Tinubu’s administration. Minister of Budget and Economic Planning, Abubakar Bagudu, emphasized the government’s commitment to aggressive revenue generation and innovative financing to fund critical infrastructure projects, including housing, roads, and railways.
Bagudu also highlighted Nigeria’s GDP growth of over 3 percent for three consecutive quarters, a reduction in the fiscal deficit, and increased FAAC allocations to states as positive indicators of the country’s economic trajectory.
As Nigeria’s debt continues to rise, analysts and policymakers alike stress the importance of prudent borrowing and sustainable economic strategies to avoid long-term financial risks.
