April 7, 2023/Coronation Research
According to Nigeria’s Debt Management Office (DMO), Nigeria’s total public debt rose by 5.0% q/q or N2.2trn to N46.3trn at end-December ’22 from N44.1trn at end-September ’22. On a y/y basis, total public debt increased by 16.9%. We note that as at end-December ’22, public debt is equivalent to 23.2% of 2022 nominal GDP.
This is relatively low when compared with other African emerging economies such as Egypt (87%), Ghana (82%), Kenya (68%), and South Africa (67%). It is also in line with the DMO’s debt management target of a debt-to-GDP ratio of 40% for the period 2020-2023 and below the limit of 55% set by the World Bank for countries within Nigeria’s peer group.
Total domestic debt increased by 2.2% q/q and 16.0% y/y to N27.5trn at end-December. The increase can be partly attributed to increases in FGN bonds (4.5% q/q), FGN Sukuk (21.2% q/q), and promissory notes (3.1% q/q). These new borrowings were primarily to finance the 2022 budget deficit. It is worth highlighting that the capital component of the 2022 fiscal budget has been extended to run till end-June 2023.
Within domestic debt, FGN instruments accounted for 80.6% of total domestic debt while sub-nationals accounted for 19.4%. Bonds and NTBs accounted for 93.4% of total FGN domestic debt while FGN Sukuk, treasury bond, savings bond, green bond and promissory notes collectively contributed to 6.2% of the total domestic debt stock.
Domestic debt for states and the FCT, decreased by -1.9% q/q to N5.3trn at end-December ’22 from N5.4trn recorded in September ’22. On a y/y basis, it increased by 20.5%. The most indebted states include Lagos (N658bn), Ogun (N232bn), Rivers (N225bn), Akwa-Ibom (N214bn), and Imo (N205bn).
The external debt stock stood at USD41.7bn (N18.7trn) at end-December ’22. This represents an increase of 5% q/q. The increase in external debt can be partly attributed to upticks in loans sourced from the IMF (3.7% q/q), World Bank (11.2% q/q), and China (4.9% q/q).
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