Nigeria’s Public Debt Hits N142.3 Trillion in Q3 2024, Up by N8.02 Trillion

Nigeria’s overall national debt increased by 5.97% (N8.02 trillion) from N134.3 trillion in June 2024 to N142.3 trillion as of September 30, 2024.

This aligns with the most recent information that the Debt Management Office (DMO) made public on Tuesday.

According to Nairametrics, this increase represents the combined effects of growing domestic borrowing and the impact of exchange rate depreciation on external debt when translated into naira terms.

Currency depreciation fuels the rise in external debt.

According to DMO data, Nigeria’s external debt increased slightly by 0.29% in dollar terms from $42.90 billion in June to $43.03 billion in September.

Nonetheless, the naira equivalent of external debt increased by 9.22% over the same period, from N63.07 trillion to N68.89 trillion.

The devaluation of the naira relative to the US dollar, which caused the exchange rate to drop from N1,470.19/$ in June to N1,601.03/$ by the end of September, was a major factor in the increase.

Growing National Debt

Domestic debt had a mixed performance, falling from $48.45 billion in June to $45.87 billion in September, a 5.34% decrease in monetary terms. However, domestic debt rose from N71.22 trillion to N73.43 trillion, a 3.10% increase in naira terms.

The majority of the domestic debt, which increased from N66.96 trillion in June to N69.22 trillion by September, was owed by the Federal Government. On the other hand, state and Federal Capital Territory (FCT) domestic debt decreased marginally from N4.27 trillion to N4.21 trillion.

THE NEWS CHRONICLES also noted that Federal Government bonds continued to be the biggest contributor to domestic debt, rising from N52.32 trillion in June to N54.65 trillion in September, a 4.47% increase. Compared to 78.13% in the prior quarter, this amounts to 78.95% of the entire domestic debt stock.

Most of this growth was due to the issue of bonds in naira currency. Additionally, Nigeria added N1.47 trillion to its debt portfolio by issuing its first domestic bond denominated in dollars.

Other Elements Of Domestic Debt

Nigerian Treasury Bills: Treasury Bills, the second-largest component of domestic debt, decreased slightly from N11.81 trillion to N11.73 trillion, a decrease of 0.66%. This cut aligns with initiatives to reduce rollover risks and manage short-term debt.

Promissory notes: Promissory notes used to pay off government debt increased by 5.80% from N1.67 trillion in June to N1.77 trillion in September.

FGN Sukuk: Infrastructure funding instrument Federal Government Sukuk fell 9.14% from N1.09 trillion to N992.56 billion.

FGN Savings Bonds: The rising participation of retail investors was reflected in the 16.11% growth in savings bonds to N64.09 billion.

Green Bonds: At N15 billion, green bonds made up a negligible 0.02% of domestic debt.

Components Of External Debt

With very slight changes in bilateral and multilateral commitments, an analysis of Nigeria’s external debt stock, which stood at $43.03 billion in September 2024, showed a generally steady trend.

Multilateral debt: Multilateral obligations remained dominant at 50.60% of the total external debt, rising by 0.67% to $21.77 billion. The rise was driven by larger disbursements from institutions like the World Bank, which added $513.06 million to its International Development Association portfolio, currently at $16.84 billion.

Bilateral loans: The bilateral debt dropped from $5.89 billion to $5.81 billion, a minor decrease of 1.33%. While debts to France and Germany stayed the same, loans from China, Nigeria’s biggest bilateral lender, fell by $99.98 million.

Commercial loans: Commercial loans, which comprise 35.14% of total external debt, were essentially unchanged at $15.12 billion, mostly Eurobonds.

What To Note

  • Nigeria returned to the global capital markets in December 2024, raising $2.2 billion through its Eurobond auction. Two bonds were used to raise the money: a $700 million, 6.5-year bond with a 9.625% interest rate and a $1.5 billion, 10-year bond with a 10.375% interest rate.
  • Even though there were more than $9 billion in total contributions, just $2.2 billion was allocated. In the face of declining revenue and growing pressure on public spending, these monies are anticipated to sustain the 2024 budget.
  • The country’s external debt is expected to rise even more in Q4 2024 when Eurobond proceeds are added.
  • Nigeria’s growing debt profile, depreciating naira, and growing reliance on domestic borrowing call into question the country’s debt sustainability.

 

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