As of December 2023, Nigeria’s public debt has surged to an estimated N97.34 trillion ($108.23 billion), marking a staggering 146% increase from the previous year’s N39.56 trillion ($95.77 billion), according to data from the Debt Management Office (DMO).
The significant rise is primarily attributed to the addition of N20 trillion ($48 billion) in Ways and Means lending by the Central Bank of Nigeria (CBN) to the government and a substantial 60% devaluation of the naira.
Both the federal and state governments are grappling with a combination of domestic and foreign debts. Domestic debt, which comprises FGN securities, treasury bills, and CBN’s Ways and Means, stands at approximately N59.12 trillion, with states accounting for N5.86 trillion of this sum.
FGN securities, particularly FGN Bonds, dominate the domestic debt landscape, soaring to N42.2 trillion, a remarkable 169.5% year-over-year increase, largely fueled by the infusion of Ways and Means into FGN Bonds.
Treasury Bills have also seen a notable uptick, reaching N6.5 trillion, reflecting a 47.5% year-over-year rise. Promissory Notes and FGN Sukuk Funds have experienced substantial increases as well, indicating robust utilization and confidence in these instruments.
On the foreign debt front, Nigeria’s total external debt balance stands at $42.5 billion (N38.22 trillion), with states owing $4.61 billion (N4.15 trillion). Notably, China tops the list of bilateral creditors, with loans totaling $5.17 billion, constituting about 86.7% of the total owed to countries.
Multilateral institutions such as the Islamic Development Bank (IsDB) and the International Development Association (IDA) have significantly increased their lending, reflecting growing support for developmental projects in Nigeria.
While Nigeria’s total public debt remains below the internationally accepted threshold of 42% of GDP, the reliance on domestic debt exposes the government to currency risks. With 61% of debts denominated in local currency, the government maintains moderate control over managing its domestic obligations.
However, servicing foreign debts has become increasingly expensive, particularly amid revenue challenges and naira devaluation. Although Nigeria may continue borrowing through the issuance of FGN securities to bridge budget deficits, caution is warranted regarding further accumulation of foreign debt given current economic conditions.
