April 5, 2024/Coronation Research
According to Nigeria’s Debt Management Office (DMO), total public debt increased by 10.7% q/q or N9.4trn to N97.3trn at end-December ’23. On a y/y basis, public debt increased by 110.5%. As at end-December’23, public debt was equivalent to 42.3% of 2023 nominal GDP. This is above the DMOs debt-to-GDP ratio target of 40% for 2020-2023.
However, still below the limit of 55% set by the World Bank for countries within Nigeria’s peer group. We note that Nigeria’s debt-to-GDP ratio is relatively low when compared to other African emerging economies such as Ghana (88.8%), Egypt (87.2%), South Africa (72.2%), Kenya (67%).
For total domestic debt, we noticed a 5.7% q/q increase to N59.1trn at end-December ’23. There were q/q increases recorded across FGN bonds (2.5% q/q), NTBs (38.1% q/q), FGN Savings bond (15.5% q/q) and FGN Sukuk (47.1% q/q).
In Q1 ‘24, the FGN’s domestic borrowing target via FGN Bonds was N3.3trn. However, based on our estimates, c. N2.5trn was raised from cumulative FGN bond issuances (missing the target by 23.8%). However, this is 41% of the total domestic borrowing target of N6.1trn.
Other sources include net NTB issuances (N5.6trn). Our view remains that the FGN is likely to surpass its initial domestic borrowing target of 6.1trn by the end-2024.
The domestic debt for states and the FCT increased by +1.8% q/q to N5.8trn at end December ’23 from N5.7trn recorded at end-September ’23. On a y/y basis, it grew by 9.8%. The most indebted states include Lagos (N1.0trn), Delta (N373.4bn), Ogun (N293.6bn), Rivers (N232.5bn), Cross–River (N220.2bn) and Imo (N217.1bn).
The total domestic debt stock accounts for 67% of total public debt.
External debt stock increased by 19.5% q/q to N38.2trn (USD42.5bn) at end-December ’23 compared with N31.9trn (USD41.5bn) recorded at end-September ’23. Multilateral lenders such as the World Bank, IMF, AFDB, as well as bilateral lenders like China, France, Japan, India, and Germany collectively accounted for 63.8% of total external debt while commercial loans (Eurobonds), and syndicated loans accounted for 36.2%. Overall, the external debt stock accounts for 43% (N38.2trn or USD42.4bn) of total public debt.
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