NIGERIA’s public debt profile rose to N142.32 trillion as of September 30, 2024, compared to N134.3 trillion as of June that same year, the Debt Management Office (DMO) has revealed.
This latest figure means each Nigerian could be owing about N656,514 debt stock per capita when N142.32 trillion is divided by the country’s estimated population of 216.78 million.
However, the DMO stated the debt stock comprises external and domestic borrowings, hinting that it used the Central Bank Nigeria’s (CBN) official exchange rate of N1,601.028/$1 as of September 30, 2024 to convert the external debt to Naira, relative to N1,470.19/$1 it used in June 30, 2024.
In dollar terms, Nigeria’s public debt stood at $88.89 billion in September 2024 compared to $91.35 billion in June 2024, reflecting a higher debt profile due to the impact of naira depreciation against the dollar.
External debt rose to N68.89 trillion from N63.07 trillion while domestic debt rose to N73.43 trillion from N71.22 trillion. It is likely to rise further by the fourth quarter with the federal government’s $2.2 billion Eurobond issuance in December last year.
The DMO’s data indicates that the 36 states and Federal Capital Territory (FCT) owe N4.21 trillion of the domestic debt stock, and the Federal Government of Nigeria (FGN) owes N69.22 trillion.
A cursory look at the debt stock indicates the FGN domestic debt stock increased from N66.96 trillion in June 2024 to N69.22 trillion in September 2024, which might likely have been driven by increased issuance of FGN bonds and other fixed-income securities.
However, states and FCT debt stock declined to N4.21 trillion from N4.27 trillion in the review period.
A further breakdown of the DMO’s data shows domestic debt carrying a weight of 51.60 per cent higher than external debt’s 48.40 per cent.
According to the DMO, only the domestic debt stock for Cross Rivers State was as of June 30, 2024, while all other states and FCT were as of September 2024.
The surging debt profile has been of concern over Nigeria’s debt sustainability, especially with the exchange rate volatility driving up the local currency cost of external obligations.
The overall increase in domestic debt highlights the federal government’s growing dependence on local markets to finance budget deficits amid constrained foreign exchange reserves.
Economic watchers are worried over the risk exposure of Nigerians by the debts with government proposing N15.81 trillion for debt servicing in 2024 budgets estimates.
“Borrowing is not criminal as the country faces serious infrastructural challenge but borrowing to pay interest on outstanding debts is wrong,” said the chief executive officer of Economy Associates, Ayo Teriba.
Most notably, Nigerians are critical of Tinubu-led administration’s appetite for taking more loans while struggling to pay the country’s debts with dilapidated infrastructure littered all over the country.
Despite these huge debts, politicians still live flamboyance lifestyle with long convoys among others priortised at the expense of basic infrastructure such as access to good and affordable primary health centre, good road infrastructure and affordable housing.
Repeatedly, financial analysts have raised concerns about the sustainability of the rising debt levels, particularly as interest payments consume a significant portion of government revenue.
The ICIR reported last year, the World Bank raised the alarm that Nigeria used over 96 per cent of its revenue generated in 2022 to service debt, adding that the constant fiscal deficit has aggravated the country’s public debt stock.
Apart from the World Bank, Economic watchers insist Nigeria appetite for Eurobond is exposing it to higher currency risks triggered by volatile exchange rate.
“We need to be worried about the interest rate we pay on the Eurobond because it is commercial debt and we need to be worried about even the current interest rate on Treasury bills and Federal Government bonds, they are too high. These things impose a lot of pressure on government finances, on the point of view of debt servicing,” former director-general of the Lagos Chamber of Commerce and Industry (LCCI) and the chief executive officer of Centre for the Promotion of Private Enterprise (CPPE), Muda Yusuf told The ICIR.
Yusuf also noted that Nigeria’s exposure to Eurobonds should be considerably reduced going forward, noting that it is extremely very critical.
“I think we need to be more cautious at the rate at which we accumulate these debts because increasing debt will create challenges of rising debt service commitments,” he stressed.
Between June to September 2024, the naira depreciated from N1,470.19/$ to N1,601.03/$, exacerbating the burden of external debt in local currency.
President Bola Tinubu has proposed a N13.08 trillion deficit and N15.81 trillion in debt servicing in the 2025 budget currently being interrogated at the National Assembly.
In December 2024, the President submitted the 2025 budget size of N47.90 trillion to the National Assembly for review and approval, The ICIR reported.
The proposed budget has a revenue projection of N34.82 trillion, a crude oil production assumption at 2.06 million barrels per day (mbpd), an inflation rate of 15 per cent and a naira-dollar exchange rate of N1,500.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.