Nigeria’s total public debt rose to N142.3 trillion as of September 30, 2024, an increase of 5.97 per cent (N8.02tn) from June 2024’s N134.3tn.
The debt, comprising external and domestic obligations, reflects the significant impact of exchange rate depreciation on external borrowings when converted to Naira terms.
Data from the Debt Management Office showed that external debt in dollar terms increased marginally by 0.29 per cent, from $42.90bn in June to $43.03bn in September.
However, external debt surged by 9.22 per cent in naira terms, rising from N63.07tn to N68.89tn within the quarter.
This sharp increase was attributed to the naira’s depreciation, with the exchange rate weakening from N1,470.19/$ in June to N1,601.03/$ by the end of September.
On the other hand, domestic debt was 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.
The Federal Government’s external debt was $38.12bn in September, up from $38.01bn in June. States and the Federal Capital Territory held $4.91bn in external debt, a slight increase from $4.89bn.
The Federal Government’s obligations for domestic debt rose from N66.96tn to N69.22tn, while states and the FCT recorded a minor reduction from N4.27tn to N4.21tn.
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.
According to The PUNCH analysis, 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. This represents 78.95 per cent of the total domestic debt stock, up from 78.13 per cent in the previous quarter.
The issuance of bonds in naira accounted for most of the increase, as the dollar-denominated bond was newly introduced to the domestic debt stock at N1.47tn.
Meanwhile, Nigeria successfully launched its first-ever domestic dollar-denominated bond, seeing over $900m in subscriptions.
The $500m bond, coordinated by the Africa Finance Corporation, marked a pivotal moment in Nigeria’s economic development and highlights the growing confidence in the country’s capital market.
The five-year bond, issued at par with a 9.75 per cent annual coupon, witnessed a 180 per cent subscription.
This domestic bond added N1.47tn to Nigeria’s domestic debt.
Further analysis showed that Nigerian Treasury Bills, the second-largest component, experienced a marginal decline, falling by 0.66 per cent to N11.73tn from N11.81tn in the previous quarter.
The reduction aligns with efforts to moderate short-term debt instruments, likely in response to concerns over rollover risks and rising interest rates.
Promissory notes, issued to settle government obligations such as contractor payments, increased by 5.80 percent to N1.77tn in September from N1.67tn in June.
This includes a significant increase in foreign-denominated promissory notes, which rose from N1.18tn to N1.19tn, reflecting adjustments due to currency fluctuations.
FGN Sukuk, a key instrument for infrastructure funding, decreased by 9.14 per cent to N992.56bn, down from N1.09tn.
