Nigeria’s total public debt rose to N142.3 trillion as of September 30, 2024, reflecting a 5.97% increase from N134.3 trillion in June. The rise is largely attributed to exchange rate depreciation impacting external borrowings.
According to the Debt Management Office, external debt in dollar terms also edged up from $42.90 billion in June to $43.03 billion in September. The naira value of external debt saw a substantial rise of 9.22%, increasing from N63.07 trillion in June to N68.89 trillion by the end of September. This surge was primarily attributed to the depreciation of the naira against the US dollar, with the exchange rate weakening from N1,470.19 per dollar in June to N1,601.03 per dollar in September.
Domestic debt experienced a mixed trend during the review period. In dollar terms, it declined by 5.34%, falling from $48.45 billion in June to $45.87 billion in September. However, in naira terms, domestic debt rose by 3.10%, increasing from N71.22 trillion to N73.43 trillion.
The Federal Government’s external debt rose slightly, from $38.01 billion in June to $38.12 billion in September, while states and the Federal Capital Territory (FCT) held $4.91 billion in external debt, up from $4.89 billion. For domestic debt, the Federal Government’s obligations climbed from N66.96 trillion to N69.22 trillion, with states and the FCT seeing a slight reduction from N4.27 trillion to N4.21 trillion.
Overall, Nigeria’s total public debt in dollar terms decreased by 2.70%, from $91.35 billion in June to $88.89 billion in September. However, the naira-denominated debt burden remains significant, exacerbated by exchange rate fluctuations that continue to inflate the local currency cost of external debt. These developments raise growing concerns about the sustainability of Nigeria’s debt.
An analysis of Nigeria’s debt instruments reveals that Federal Government bonds continue to be the largest component of domestic debt, increasing by 4.47% from N52.32 trillion in June to N54.65 trillion in September. These bonds now make up 78.95% of the total domestic debt, a slight rise from 78.13% in the previous quarter. The majority of the increase in domestic debt was driven by the issuance of naira-denominated bonds, with the introduction of a dollar-denominated bond adding N1.47 trillion to the domestic debt stock.
A further breakdown of Nigeria’s domestic debt shows that Treasury Bills, the second-largest component, saw a slight decline of 0.66%, dropping from N11.81 trillion in the previous quarter to N11.73 trillion. This decrease aligns with efforts to reduce short-term debt and manage rollover risks. Promissory notes, used to settle government obligations, rose by 5.80%, from N1.67 trillion to N1.77 trillion. Federal Government Sukuk, a tool for infrastructure funding, decreased by 9.14%, falling from N1.09 trillion to N992.56 billion. Meanwhile, FGN Savings Bonds grew by 16.11%, reaching N64.09 billion, signaling increased participation from retail investors. Green Bonds, however, remained unchanged at N15 billion, representing a minimal 0.02% of the domestic debt stock.
An analysis of Nigeria’s external debt, which stood at $43.03 billion in September 2024, reveals a relatively stable structure with minor shifts in multilateral and bilateral obligations. Multilateral debt rose by 0.67% to $21.77 billion, accounting for 50.60% of the total, largely due to additional disbursements from the World Bank, which contributed $513.06 million to its International Development Association portfolio, now totaling $16.84 billion.
Bilateral loans decreased slightly by 1.33%, dropping from $5.89 billion to $5.81 billion, with a notable reduction in loans from China, Nigeria’s largest bilateral lender, by $99.98 million. However, debts owed to France and Germany remained unchanged. Commercial loans, mostly in the form of Eurobonds, held steady at $15.12 billion, representing 35.14% of the external debt.
The rise in domestic debt reflects the Federal Government’s increasing reliance on local markets to cover budget deficits, due to limited foreign exchange reserves and restricted external borrowing opportunities.
