January 3, 2023/CSL Research

According to the recent data released by the Debt Management Office (DMO), Nigeria’s total debt stock for the period ending 30 September, 2023, rose to N87.91 trillion (US$114.35 billion), a marginal increase of 0.61% from N87.38 trillion (US$113.42 billion) recorded at the end of June 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 marginal growth in the debt figure was attributed to a decrease in the nation’s external debt, which was down to N31.98 trillion (US$41.59 billion) in September. from N33.25 trillion (US$43.16) billion in June. However, there was a moderate increase in total domestic debt stock, which rose to N55.93 trillion in September from N54.13trillion in June 2023. ·

The share of external debt to total public debt was 36.38% in Q3 2023. The DMO mentioned the redemption of a US$500 million Eurobond and the payment of US$413.859 million as the first principal repayment of the US$3.4 billion loan secured from the International Monetary Fund (IMF) in 2020 during the COVID-19 pandemic, as the major reasons behind the decrease in external debt. Nigeria’s total public debt has been on the rise in recent years.

The government’s fiscal deficit continues to rise as revenue mobilization remains largely constrained and spending continues to jump. Nigeria’s tax base remains narrow, and the country’s dependence on oil revenue, makes it vulnerable to fluctuations in global oil prices.

The Naira’s depreciation against major currencies like the US Dollar also makes existing foreign-denominated debt more expensive to service, contributing to the overall debt burden.

The country’s debt service to revenue ratio also continues to rise. In the recently passed 2024 budget, debt servicing was pegged at N8.27 trillion from a total of N28.77 trillion, indicating that the country will continue to spend a significant portion of its revenue on debt servicing in 2024. Though the country’s debt level remains low in comparison to many SSA peers, debt service cost remains a problem. However, the country’s relatively low external debt levels give some comfort.