25th October 2024
By Idris Buba
Nigeria’s current debt profile has raising from N12.6tn to N134.3tn ($91.3bn) in the last three months, the end of the second quarter of 2024,
This amounts to 10.35 per cent increase from the N121.7tn ($91.5bn) recorded in the first quarter of this year.
According to an official document, the rise has been attributed primarily to the devaluation of the naira as captured in a session where Nigeria hosted foreign investors on the sidelines of the World Bank/IMF annual meetings in Washington DC.
The document indicated that, “In the second quarter of 2024, the debt stock grew in naira terms to N134.3tn ($91.3bn) from N121.7tn ($91.5bn) in first quarter of 2024, driven mainly by exchange rate devaluation. The dollar amount of debt was roughly the same.”
While it looked like Nigeria’s debt is reducing in dollar terms, there was an increase of N5.55tn or 8.45 per cent in domestic debt, from N65.65tn in first quarter 2024 to N71.2tn by second quarter 2024.
Similarly, there was an increase of $780m in external debt from $42.12 bn in the first quarter of this year to $42.9bn by June 2024.
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The presented document showed that domestic debt continued to dominate Nigeria’s public debt portfolio in second quarter of 2024, accounting for 53 per cent of the total debt stock at N71.2tn ($48.4bn).
In the same vein, external debt made up 47 per cent, amounting to N63.1tn ($42.9bn).
Nigeria’s debt-to-GDP ratio has exceeded 50 per cent, according to the document.
The document showed that Federal government Bonds represented 78 per cent of the domestic debt, affirming the government’s reliance on local bond markets for financing.
Nigerian Treasury Bills, Savings Bonds, Sukuk, Promissory Notes, and Green Bonds are other domestic instruments used indicating a diverse borrowing strategy.
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On the external front, multilateral loans accounted for 50.4 per cent of the total external debt, reflecting Nigeria’s preference for financing from international bodies such as the World Bank and the African Development Bank.
Bilateral loans made up 13.7 per cent, while commercial loans represented 35.9 per cent of external debt.
An at earlier meeting with investors on Wednesday, Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Wale Edun, announced that despite prior advice from the International Monetary Fund against issuing the bond, the country’s $500m domestic bond was oversubscribed, raising over $900m from investors.
Edun acknowledged the important role played by the IMF in providing concessional loans, funding, and technical support to countries, noting that these institutions help shape domestic policies and strengthen economic frameworks.
However, he stressed that nations are not bound to follow every recommendation.
