September 22, 2023/CSL Research
Based on the recent data released by the Debt Management Office (DMO), Nigeria’s total debt stock for the period ending June 30th, 2023, rose to N87.38 trillion (US$113.42 billion), an increase of 75.29% from N49.85 trillion (US$108.30 billion) recorded at the end of March 2023. 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 DMO noted that the recently securitized Ways and Means loans were the reason for the significant spike in total public debts, as it was included in the total public debt stock for the quarter.
In June 2023, total external borrowings grew to N33.25 trillion from N19.64tn recorded in March 2023 while total domestic debt stock grew to N54.13 trillion from N30.21 in March 2023. We believe the increase in public debt can be attributed to increased borrowings by the FGN and sub-nationals from local and external sources, primarily to fund budget deficits and execute projects. We note that domestic debt stock is made up of major instruments like FGN bonds, treasury bills, treasury bonds, savings bonds, FGN Sukuk, promissory notes, and green bonds.
Nigeria’s total public debt has been on the rise in recent years. The government’s fiscal deficit for 2023 is the highest on record, as revenue mobilization remains largely constrained and spending continues to jump. The country’s debt servicing rose by 55.71% to N1.24tn in three months in Q1 2023, indicating that the country continues to spend a significant portion of its revenue on debt servicing, limiting its fiscal space. We believe that, while the country’s revenues remain constrained, the currency depreciation will benefit oil revenues, and as a result, we believe that the increase in income could help control the country’s rising debt stock in the short run. Furthermore, we believe that the elimination of fuel subsidies, which accounted for more than 75% of gross oil revenue in 2022, will free up additional revenues for debt servicing.
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