Nigeria’s Public Debt Rises by N12.6 Trillion, Driven by Naira Devaluation

….Ben Ndubuwa….

Nigeria’s total public debt has climbed by N12.6 trillion in three months, reaching N134.3 trillion ($91.3 billion) at the end of the second quarter of 2024, The PUNCH reports. This 10.35% increase from the N121.7 trillion ($91.5 billion) recorded in the first quarter is attributed primarily to the naira’s devaluation, according to official documents presented at the World Bank/IMF annual meetings in Washington, DC, where Nigeria hosted foreign investors.

Despite the seeming reduction in dollar terms, Nigeria’s debt surged domestically by N5.55 trillion or 8.45% in Q2, moving from N65.65 trillion to N71.2 trillion. Additionally, external debt increased by $780 million, from $42.12 billion to $42.9 billion.

The document highlights that domestic debt remains dominant, making up 53% of the total debt stock at N71.2 trillion ($48.4 billion), while external debt accounts for 47%, amounting to N63.1 trillion ($42.9 billion). The country’s debt-to-GDP ratio has now surpassed 50%.

To finance its debt, the government has relied heavily on domestic bonds, which make up 78% of domestic debt, alongside other instruments like Treasury Bills, Savings Bonds, and Green Bonds. In external financing, multilateral loans from institutions like the World Bank and African Development Bank represent 50.4% of total external debt.

Nigeria’s recent $500 million domestic dollar-denominated bond issuance was met with an enthusiastic response, oversubscribing to $900 million, announced Finance Minister Wale Edun. The IMF had cautioned against this issuance, but Edun emphasized Nigeria’s independence in financial decisions. “These institutions can provide value, but we don’t always have to take their advice” he said.

Edun acknowledged the IMF’s crucial support, including concessionary loans and policy guidance, yet stressed the government’s discretion in determining the country’s best financial strategy.