Nigeria’s public debt stock surged to N134.3 trillion ($91.3 billion) by the end of the second quarter of 2024, reflecting a 10.35% increase from N121.7 trillion ($91.5 billion) in the first quarter. The rise in debt, largely driven by the devaluation of the naira, underscores the ongoing challenges the country faces with exchange rate fluctuations, according to an official document from the Ministry of Finance, exclusively obtained by Nairametrics.
“In Q2 2024, the debt stock grew in naira terms to N134.3 trillion from N121.7 trillion in Q1, driven mainly by exchange rate devaluation. The dollar amount of debt was roughly the same,” the document explained. This indicates that while the debt increased in local currency terms, the dollar equivalent remained relatively stable, highlighting the significant impact of currency movements on Nigeria’s debt valuation.
Domestic Debt Dominates Public Borrowing
Nigeria’s domestic debt continues to dominate its overall debt portfolio, accounting for 53% of the total debt stock in Q2 2024, amounting to N71.2 trillion ($48.4 billion). Meanwhile, external debt stood at N63.1 trillion ($42.9 billion), or 47% of the total debt.
Further analysis reveals that the country’s debt-to-GDP ratio has risen to over 50%, raising concerns about fiscal sustainability. This growing debt burden reflects Nigeria’s reliance on both domestic and external borrowing to finance its budget and infrastructure needs.
FGN Bonds Account for 78% of Domestic Debt
FGN Bonds continue to dominate Nigeria’s domestic debt landscape, representing 78% of the total domestic debt portfolio. Other instruments, such as Nigerian Treasury Bills, Savings Bonds, Sukuk, Promissory Notes, and Green Bonds, further diversify the government’s domestic borrowing strategies.
On the external debt front, multilateral loans from institutions like the World Bank and African Development Bank accounted for 50.4% of the total, while bilateral loans made up 13.7%. Commercial loans contributed 35.9%, reflecting Nigeria’s strategic mix of concessional and market-based borrowing.
Debt Service Payments Surge by 69%
Nigeria’s debt servicing costs have surged by 69% in the first half of 2024, reaching N6.04 trillion, up from N3.58 trillion during the same period in 2023. This spike in debt service obligations, driven in part by naira devaluation, has placed significant pressure on the Federal Government’s finances. Debt service payments accounted for 50% of total expenditure and 162% of total revenue generated in the first half of 2024.
During a press conference at the IMF/World Bank Annual Meetings in Washington D.C., IMF financial counsellor Tobias Adrian noted that Nigeria, along with other frontier markets, has remained active in the debt market throughout 2024, despite higher financing costs. He acknowledged that while access to financing has become more expensive, issuance levels have remained encouraging.
Government Plans for Affordable Financing
Minister of Finance and Coordinating Minister of the Economy, Wale Edun, is pushing for increased international support to help Nigeria access affordable financing. Edun, leading Nigeria’s delegation at the IMF/World Bank meetings, emphasized the need for international cooperation to support the country’s ongoing structural reforms.
As Nigeria continues to navigate its debt challenges, the government remains focused on securing adequate funding to stabilize its economy and ensure long-term growth.
