April 3, 2023/CSL Research
According to the recent data released by Debt Management Office (DMO), Nigeria’s total public debt stock increased to N46.25trn or US$103.11bn at the close of 2022. The figure consists of the domestic and external total debt stocks of the federal government and the sub-national governments (36 state governments and the Federal Capital Territory). The comparative figure of public debt as of December 31, 2021, was N39.56trn or US$95.77bn. In terms of composition, the total domestic debt stock was N27.55trn (US$61.42bn) while total external debt stock was N18.70trn (US$41.69bn). The government also has its ways and means loan of N23.72tn which is being proposed to be securitised into a 40-year bond at 9.0%.
The 16.9% y/y increase from 2021 to 2022 was attributable to new borrowings by the FGN and sub-national governments, primarily to fund budget deficits and execute projects. FGN bonds, treasury bills, treasury bonds, savings bond, FGN sukuk, promissory notes and green bonds are the major instruments which make up domestic debt stock with FGN bonds and treasury bills contributing 74% and 20% respectively. The issuance of promissory notes by the FGN to settle some liabilities also contributed to the growth in the debt stock.
In the last ten years, Nigeria’s total public debt has skyrocketed by 360.47%, while in the last eight years of the current administration, it has surged by 266.96%. Based on FY 2022 GDP data at current prices, the debt to GDP ratio comes to about 23% (excluding ways and means), below Nigeria’s self-imposed limit and IMF benchmark of 40%. The government’s fiscal deficit for 2023 is the highest on record, as revenue mobilization remains largely constrained and spending continues to jump. Debt servicing and personal costs continue to take over 63% of the total spending, limiting the fiscal space. Considering current economic realities, which do not seem set to improve in the short term, we would likely continue to see debt levels increase and the government’s continuous reliance on ways and means financing.
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