HomeFeaturesPublic Debt Burden: Nigeria's Obligations Balloon To ₦142tn

Public Debt Burden: Nigeria’s Obligations Balloon To ₦142tn

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As of September 30, 2024, Nigeria’s public debt reached N142.3 trillion, marking a 5.97 percent increase—equivalent to N8.02 trillion—since June 2024, when the figure stood at N134.3 trillion. This notable rise in debt points to the growing fiscal pressure and the expanding burden on the nation’s economic resources.

Comprising both external and domestic liabilities, the total debt reflects the growing impact of exchange rate depreciation on foreign borrowings, with the weakened naira significantly increasing the cost of servicing these obligations in local currency.

According to the Debt Management Office, external debt in dollar terms saw a slight increase of 0.29 percent, rising from $42.90 billion in June to $43.03 billion in September. This modest rise, while small, reflects the ongoing expansion of foreign liabilities amidst a fluctuating global financial environment.

The external debt, when converted to naira, saw a notable 9.22 percent surge, growing from N63.07 trillion to N68.89 trillion between June and September. This sharp rise is largely attributed to the naira’s depreciation, which saw the exchange rate deteriorate from N1,470.19 per dollar in June to N1,601.03 by the end of the quarter.

Domestic debt, on the other hand, reduced by 5.34 per cent in dollar terms, falling from $48.45bn in June to $45.87bn in September.

However, domestic debt in naira terms rose by 3.10 per cent, increasing from N71.22tn to N73.43tn during the period.

Read also: Nigeria Still Borrowing Despite Soaring Debt Pressures – IMF

The Federal Government’s external debt accounted for $38.12bn in September, up from $38.01bn in June, while states and the Federal Capital Territory held $4.91bn in external debt, a slight increase from $4.89bn.

For domestic debt, the Federal Government’s obligations rose from N66.96tn to N69.22tn, while states and the FCT recorded a minor reduction from N4.27tn to N4.21tn.

Overall, Nigeria’s total public debt in dollar terms fell by 2.70 per cent, from $91.35bn in June to $88.89bn in September.

However, the naira-denominated debt burden remained substantial.

The rising debt profile, particularly in naira terms, raises concerns over debt sustainability, especially with the exchange rate volatility driving up the local currency cost of external obligations.

Further analysis showed that the Federal Government’s domestic debt stock of N69.22tn as of September 30, 2024, was largely driven by increased issuance of Federal Government bonds and a rise in promissory notes, highlighting the government’s reliance on domestic borrowing to meet fiscal obligations.

Analysis of the debt by instruments shows that Federal Government bonds remained the largest component, rising by 4.47 per cent to N54.65tn in September from N52.32tn in June.

The Eastern Updates 

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