Nigeria’s total public debt has risen once again, reaching N142 trillion by the end of September 2024—an increase of N8.02 trillion compared to the previous quarter. The latest figures from the Debt Management Office (DMO) indicate that the weakening naira continues to push up the cost of external debt obligations, contributing to the surge.
The report shows a 5.97% rise from the N134.3 trillion recorded at the end of June 2024. The debt burden, which includes both domestic and foreign liabilities, underscores the impact of exchange rate fluctuations on external loans when expressed in local currency.
Between June and September, the exchange rate weakened from N1,470.19/$ to N1,601.03/$, leading to an increase in Nigeria’s foreign debt, which now stands at N68.88 trillion ($43 billion), making up 48.4% of the total debt stock.
Domestic and External Debt Trends
In naira terms, the country’s external debt rose by 9.22% within the quarter, climbing from N63.07 trillion to N68.89 trillion. Meanwhile, the domestic debt component, which accounts for 51.6% of the total debt, stood at N73.43 trillion, up from N71.22 trillion.
A breakdown of domestic debt indicates that the federal government owes N69.2 trillion, while state governments’ debt slightly declined from N4.27 trillion to N4.21 trillion. On the external front, the federal government’s debt rose marginally to $38.12 billion, while state and FCT obligations increased slightly to $4.91 billion.
In contrast, when viewed in dollar terms, Nigeria’s total public debt actually declined by 2.70%, dropping from $91.35 billion in June to $88.89 billion in September, reflecting the impact of currency devaluation.
Growing Concerns Over Debt Sustainability
Despite the decrease in dollar terms, Nigeria’s debt stock as a percentage of GDP has increased to 78.95% from 78.13% recorded in June, significantly exceeding the DMO’s self-imposed limit of 40% under its Medium-Term Debt Management Strategy.
Although the current debt-to-GDP ratio of 55% remains below the International Monetary Fund’s (IMF) threshold of 60% for emerging markets, concerns persist over Nigeria’s revenue challenges and foreign exchange volatility, which could further exacerbate the debt burden.
Experts warn that the rising debt profile—especially in local currency terms—raises serious questions about sustainability, with debt servicing costs set to rise even further. The pressure on government finances could potentially trigger a fiscal crisis, especially as the nation grapples with soaring inflation and a prolonged cost-of-living crisis.
Potential Solutions and Outlook
While recent Central Bank policies have helped stabilize exchange rate fluctuations, stakeholders argue that boosting revenue generation through tax reforms and diversifying income streams are crucial steps to reducing reliance on borrowing.
As Nigeria moves forward, fiscal policymakers will need to strike a balance between growth and debt management to ensure long-term economic stability
