Nigeria’s total public debt rose to N142.3 trillion as of September 30, 2024, representing an increase of 5.97% (N8.02 trillion) compared to N134.3 trillion in June 2024.
This is according to the latest data released by the Debt Management Office (DMO) on Tuesday.
Nairametrics observed that this increase reflects the combined effects of rising domestic borrowing and the impact of exchange rate depreciation on external debt when converted to naira terms.
External debt surge driven by currency depreciation
Data from the DMO showed that Nigeria’s external debt in dollar terms grew marginally by 0.29%, from $42.90 billion in June to $43.03 billion in September.
However, the naira equivalent of external debt surged significantly by 9.22%, rising from N63.07 trillion to N68.89 trillion during the same period.
Nairametrics further observed that Federal Government bonds remained the largest component of domestic debt, increasing by 4.47% to N54.65 trillion in September, up from N52.32 trillion in June. This represents 78.95% of the total domestic debt stock, an increase from 78.13% in the previous quarter.
The issuance of bonds in naira terms accounted for the majority of this growth. Also, Nigeria introduced its first domestic dollar-denominated bond, adding N1.47 trillion to the debt stock.
Other domestic debt components
Nigerian Treasury Bills: The second-largest domestic debt component, Treasury Bills, declined marginally by 0.66% to N11.73 trillion, from N11.81 trillion in the previous quarter. This reduction aligns with efforts to moderate short-term debt and mitigate rollover risks.
Promissory notes: Promissory notes, used to settle government obligations, grew by 5.80%, increasing from N1.67 trillion in June to N1.77 trillion in September.
FGN Sukuk: Federal Government Sukuk, an infrastructure funding instrument, declined by 9.14% to N992.56 billion, down from N1.09 trillion.
FGN Savings Bonds: Savings bonds increased by 16.11% to N64.09 billion, reflecting growing retail investor participation.
Green Bonds: Green bonds remained unchanged at N15 billion, maintaining their minimal contribution of 0.02% to the domestic debt stock.
External debt components
Analysis of Nigeria’s external debt stock of $43.03 billion in September 2024 revealed a largely stable profile, with only minor adjustments in multilateral and bilateral obligations.
Multilateral debt: Multilateral obligations increased by 0.67% to $21.77 billion, maintaining their dominance at 50.60% of the total external debt. The increase was driven by additional disbursements from institutions like the World Bank, which added $513.06 million to its International Development Association portfolio, now at $16.84 billion.
Bilateral loans: Bilateral debt decreased slightly by 1.33%, falling from $5.89 billion to $5.81 billion. Loans from China, Nigeria’s largest bilateral lender, declined by $99.98 million, while obligations to France and Germany remained stable.
Commercial loans: Commercial loans, primarily Eurobonds, were unchanged at $15.12 billion, representing 35.14% of total external debt.
What you should know
Nigeria raised $2.2 billion in December 2024 through its Eurobond auction, marking its return to the international capital markets. The funds were raised through two bonds: a 6.5-year $700 million bond at 9.625% and a 10-year $1.5 billion bond at 10.375%.
While total subscriptions exceeded $9 billion, only $2.2 billion was allotted. These funds are expected to support the 2024 budget amid revenue shortfalls and mounting public spending pressures.
The addition of Eurobond proceeds in Q4 2024 is expected to further increase the country’s external debt.
The rising debt profile, coupled with naira depreciation and increasing reliance on domestic borrowing, raises questions about Nigeria’s debt sustainability.”
