Nigeria’s Public Debt Hits ₦142.3 Trillion Amid Naira Depreciation

Nigeria’s total public debt rose to ₦142.3 trillion as of September 30, 2024, reflecting a 5.97 percent increase from ₦134.3 trillion in June, according to data from the Debt Management Office (DMO).

Naijaonpoint understands that the surge in public debt, driven by both external and domestic obligations, underscores the significant impact of exchange rate depreciation on the country’s debt profile, particularly external borrowings.

In dollar terms, external debt saw a marginal increase of 0.29 percent, from $42.90bn in June to $43.03bn in September.

However, in naira terms, external debt jumped by 9.22 percent, rising from ₦63.07tn to ₦68.89tn during the same period.

This sharp increase was attributed to the weakening of the naira, which depreciated from ₦1,470.19/$ in June to ₦1,601.03/$ by the end of September.

Domestic Debt Rises Despite Dollar Decline

While domestic debt in dollar terms fell by 5.34 percent—from $48.45bn in June to $45.87bn in September—it rose by 3.10 percent in naira terms, increasing from ₦71.22tn to ₦73.43tn.

The Federal Government’s external debt rose slightly from $38.01bn in June to $38.12bn in September. States and the Federal Capital Territory (FCT) held $4.91bn in external debt, up from $4.89bn.

For domestic debt, the Federal Government’s obligations increased from ₦66.96tn to ₦69.22tn, while states and the FCT recorded a minor reduction from ₦4.27tn to ₦4.21tn.

Federal Government bonds remained the largest component of domestic debt, accounting for 78.95 percent of the total domestic debt stock, up from 78.13 percent in the previous quarter.

The bond component grew by 4.47 percent, from N52.32tn in June to N54.65tn in September, reflecting increased issuance of naira-denominated bonds.

Notably, Nigeria launched its first domestic dollar-denominated bond, which contributed N1.47tn to the domestic debt stock.

Treasury Bills And Promissory Notes

Nigerian Treasury Bills, the second-largest domestic debt component, experienced a slight decline of 0.66 percent, falling to ₦11.73tn from ₦11.81tn in the previous quarter.

This aligns with efforts to moderate short-term debt instruments amid concerns over rollover risks and rising interest rates.

Promissory notes rose by 5.80 percent to ₦1.77tn in September from ₦1.67tn in June, reflecting the government’s increased use of these instruments to settle obligations such as contractor payments.

FGN Sukuk, a key instrument for infrastructure funding, declined by 9.14 percent to ₦992.56bn, down from ₦1.09tn. In contrast, FGN Savings Bonds grew significantly, increasing by 16.11 percent to N64.09bn, signalling higher participation from retail investors.

The rising public debt, particularly in naira terms, has raised concerns about debt sustainability. Exchange rate volatility and growing reliance on domestic borrowing to finance budget deficits have compounded the situation.

Analysts warn that the Federal Government’s dependence on the domestic market could strain the economy further, especially with limited foreign exchange reserves and constrained external borrowing options.