Photo Illustration: Naira Notes 

Nigeria’s total public debt has risen to N121.67 trillion, reflecting an increase of N24.33 trillion, or 24.99 percent, over the past three months, according to the Debt Management Office.

This new figure marks a significant rise from the total debt of N97.34 trillion ($108.23 billion) reported in December 2023.

In a statement on Thursday, the Debt Management Office (DMO) reported that the public debt includes both domestic and external debts of the Federal Government of Nigeria, the 36 state governments, and the Federal Capital Territory for the period between January and March 2024.

The report read: “Nigeria’s total public debt stood at N121.67tn ($91.46bn) as of March 31, 2024. The comparative figure for December 31, 2023, was N97.34 trillion ($108.23bn). Total Domestic Debt was N65.65tn ($46.29bn) while total external debt was N56.02tn ($42.12bn).”

The increase is primarily driven by naira depreciation, as the total debt in dollar terms decreased by $16.77 billion, or 18.34 percent.

The Debt Management Office used an official exchange rate of N1,330/$ to convert external debts to naira, compared to N899.39/$ used in December 2023.

It noted that excluding the impact of naira exchange rate movements in the first quarter of 2024, domestic debt increased significantly to N65.65 trillion as of March 31, 2024, up from N59.12 trillion on December 31, 2023.

Additionally, the 36 states and the Federal Capital Territory have an external debt of $3.1 billion and a domestic debt of N4.068 trillion.

The increase in debt is also attributed to new borrowing undertaken to partly finance the 2024 budget deficit and the securitization of a portion of the N7.3 trillion Ways and Means advances at the Central Bank of Nigeria.

The statement added: “Excluding Naira exchange rate movements in Q1 2024, only the Domestic Debt component of Total Public Debt grew from N59.12 trillion on December 31, 2023, to N65.65 trillion on March 31, 2024.

“The increase was from new borrowing to part-finance the 2024 Budget deficit and securitization of a portion of the N7.3 trillion Ways and Means Advances at the Central Bank of Nigeria.

“Whilst borrowing, as provided in the 2024 Appropriation Act, will continue, we expect improvements in the Government’s Revenue to enhance debt sustainability.”

According to reports the government secured $4.95 billion in loans from the World Bank over the past 12 months, raising concerns about the growing costs of servicing external debt.

Additionally, the government anticipates new loan approvals totaling $4.4 billion from the World Bank and the African Development Bank over the next year.

According to analysis the World Bank approved funding for six projects: $750 million for power sector financing, $500 million for women’s empowerment, $700 million for girl child education, $750 million for renewable energy solutions, $750 million for resource mobilization reforms, and $1.5 billion for economic stabilization reforms.

President Bola Tinubu has emphasized his administration’s dedication to ending the cycle of overreliance on borrowing for public spending and the consequent strain of debt servicing on limited government revenues.

Tinubu recently stated that the country cannot sustain using 90 percent of its revenue for debt servicing, warning that continuing on this path would lead to disaster.

The President said, “Can we continue to service external debts with 90 per cent of our revenue? It is a path to destruction. It is not sustainable. We must make the very difficult changes necessary for our country to get (wake) up from slumber and be respected among the world’s great nations.

“To build a great nation, we must make bold decisions; even though it may be painful, it is not about you and me. It is about generations yet unborn.”

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The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has strongly opposed reliance on loans, asserting that economic stability requires the country to reduce its dependence on borrowing.

However, whether this promise will be fulfilled remains uncertain.

In a document titled, ‘2024: The Hard Road Ahead,’ the Chief Executive Officer, Financial Derivatives Company, Bismarck Rewane, highlighted that Nigeria’s debt was becoming unsustainable and warned that high interest rates in 2024 would further exacerbate the country’s debt burden.

He said, “Nigeria’s debt is becoming unsustainable. Nigeria serviced its debt with 99 per cent of its revenue in H1’23. Nigeria’s debt burden will be exacerbated by high interest rates in 2024. Efficient use of borrowed funds is crucial for its debt sustainability. The federal government must spend on productive sectors to boost revenue sources.”

He pointed out that a one percent increase in public debt would result in a 16.7 percent negative impact on GDP, and projected that if public debt rises to $114.3 billion, real GDP growth would decrease to 2.12 percent.

He added, “High debt burden but Nigeria is likely to withstand the shock.”

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