Nigeria’s public debt hits N134.3 trillion in Q2 2024

Nigeria’s public debt stock surged to N134.3 trillion ($91.3 billion) by the end of the second quarter of 2024.

This was an increase of 10.35% from the N121.7 trillion ($91.5 billion) recorded in the first quarter and announced by the Debt Management Office (DMO).

According to an official document from the Ministry of Finance exclusively obtained by Nairametrics, the increase, mainly driven by the devaluation of the naira, highlights ongoing challenges related to exchange rate volatility.

The document read: “In Q2 2024, the debt stock grew in naira terms to N134.3 trillion ($91.3 billion) from N121.7 trillion ($91.5 billion) in Q1 2024, driven mainly by exchange rate devaluation. The dollar amount of debt was roughly the same.”

Notably, while the total debt grew in naira terms, the dollar equivalent of the debt remained relatively stable, underlining the impact of currency movements on debt valuation.

Domestic debt accounts for 53% of total debt
Nigeria’s domestic and external debt portfolios reveal strategic borrowing trends, with domestic debt continuing to dominate the public debt landscape in Q2 2024.

Domestic debt accounted for 53% of the total, amounting to N71.2 trillion ($48.4 billion), while external debt made up 47%, equivalent to N63.1 trillion ($42.9 billion).

The data further shows a rising trend in the country’s debt-to-GDP ratio, which continues to escalate to over 50%, raising concerns over fiscal sustainability.

FGN bonds dominate 78% of domestic debt
FGN Bonds constituted a significant 78% of domestic debt, highlighting the government’s reliance on local bond markets.

Other instruments in the domestic market include Nigerian Treasury Bills, Savings Bonds, Sukuk, Promissory Notes, and Green Bonds, reflecting diverse borrowing options for public financing.

On the external front, multilateral loans accounted for the largest portion, making up 50.4% of external debt, demonstrating Nigeria’s preference for loans from international financial institutions like the World Bank and the African Development Bank (AfDB).

Bilateral loans followed with a 13.7% share, while commercial loans comprised 35.9% of the total external debt.

These figures highlight the balance between concessional financing and market-based borrowing, which enables Nigeria to manage debt obligations while navigating global financial markets.

The trend suggests that while Nigeria continues to rely heavily on domestic borrowing to finance its budget and infrastructure needs, it maintains a diversified external debt portfolio.

However, the growing share of external multilateral and commercial loans emphasizes the importance of sustainable debt management, especially in light of exchange rate volatility.

What you should know

During a press conference on the global financial stability report at the IMF/World Bank annual meetings in Washington D.C. on Tuesday, Tobias Adrian, the IMF’s financial counsellor and director of monetary and capital markets, said that Nigeria and other frontier markets have maintained significant activity in the debt market throughout 2024, even though financing costs have surged compared to pre-2021 levels.

He said, “Frontier markets, including Nigeria, have been active in the debt market this year, and though access to financing is still more expensive than before, the overall issuance levels have been encouraging.”

In a statement from the Ministry of Finance on Tuesday, it was noted that the Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, planned to push for adequate and affordable financing to support reforms in Nigeria.

The statement read, “Leading Nigeria’s delegation, Edun will be at the forefront of discussions on strengthening Nigeria’s economic resilience, particularly amid the nation’s ongoing structural reforms.

“He is expected to make a case for increased international support to ensure the success of these domestic initiatives, emphasising that access to adequate and affordable financing is critical to maximising the benefits of the country’s economic adjustments.”

Nairametrics earlier reported that Nigeria’s debt servicing payments surged by 69% in the first half of 2024, reaching N6.04 trillion, up from N3.58 trillion recorded in the same period of 2023.

This sharp rise in debt service obligations, likely driven by naira devaluation for foreign debt repayments, reflects the growing burden on the Federal Government as debt repayment consumes a significant portion of its financial resources.

According to data from the latest statistical bulletin of the Central Bank of Nigeria (CBN), debt service in H1 2024 made up 50% of the total expenditure of N12.17 trillion and a staggering 162% of the N3.73 trillion total revenue generated during the period. NAIRAMETRICS