Naira Devaluation Pushes FG, States Debts To N134 Trillion

Nigeria‘s total public debt increased by N12.6tn in just three months to N134.3tn ($91.3bn) in the second quarter of 2024, according to Punch.

This is a 10.35 percent increase from the N121.7tn ($91.5bn) recorded in the first quarter of this year.

The rise has been attributed primarily to the devaluation of the naira, according to an official document seen by The Punch, which was presented at a session on the sidelines of the World Bank/IMF annual meetings in Washington, DC, as Nigeria hosted foreign investors.

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The document stated, “In Q2 2024, the debt stock grew in naira terms to N134.3tn ($91.3bn) from N121.7tn ($91.5bn) in Q1 2024, driven mainly by exchange rate devaluation. The dollar amount of debt was roughly the same.”

Although it looked like Nigeria’s debt is reducing in dollar terms, The PUNCH observed that there was an increase of N5.55tn, or 8.45 percent, in domestic debt, from N65.65tn in Q1 2024 to N71.2tn by Q2 2024.

Also, there was an increase of $780m in external debt from $42.12bn in the first quarter of this year to $42.9bn by June 2024.

The document seen by The Punch showed that domestic debt continued to dominate Nigeria’s public debt portfolio in Q2 2024, accounting for 53 percent of the total debt stock at N71.2tn ($48.4bn).

External debt made up 47 percent, amounting to N63.1tn ($42.9bn).

The document also showed that Nigeria’s debt-to-GDP ratio has exceeded 50 percent.

It also showed that FGN bonds represented 78 percent of the domestic debt, affirming the government’s reliance on local bond markets for financing.

Other domestic instruments include Nigerian Treasury Bills, Savings Bonds, Sukuk, Promissory Notes, and Green Bonds, indicating a diverse borrowing strategy.

On the external front, multilateral loans accounted for 50.4 percent of the total external debt, reflecting Nigeria’s preference for financing from international bodies such as the World Bank and the African Development Bank.

Bilateral loans made up 13.7 percent, while commercial loans represented 35.9 percent of external debt.

Speaking earlier during the meeting with investors on Wednesday, Wale Edun, Nigeria’s Minister of Finance and Coordinating Minister of the Economy, announced that the country’s $500 million domestic bond was oversubscribed, raising over $900 million from investors.

This achievement comes despite prior advice from the International Monetary Fund against issuing the bond.

The Federal Government launched the dollar-denominated domestic bond on August 15, with subscriptions opening on August 20 at $1,000 per unit.

He said, “The IMF said to us that we shouldn’t do domestic issues of dollar bonds. We did it, and we were 100 percent oversubscribed, but we still valued their viewpoint and took it into account.”

Edun acknowledged the important role played by the IMF in providing concessional loans, funding, and technical support to countries, noting that these institutions help shape domestic policies and strengthen economic frameworks.

However, he stressed that nations are not bound to follow every recommendation.

“These institutions can provide value, but we don’t always have to take their advice,” he reiterated.

The minister also highlighted the significance of the IMF’s broader contributions, such as stabilising the international financial system during critical periods.