Nigeria’s debt burden is projected to rise significantly, with total debt expected to account for 54.6% of the country’s gross domestic product (GDP) by the end of 2024, according to analysts at Cordros Securities.
The Debt Management Office (DMO) reported a 10.4% increase in Nigeria’s public debt between March and June 2024, bringing the total to ₦134.30 trillion. At the beginning of the year, total debt stood at ₦121.67 trillion but climbed due to increased borrowing and the devaluation of the naira by mid-year.
Cordros analysts attributed this debt surge to persistent revenue underperformance, increased government expenditures, and the weakening of the naira, which has amplified the burden of foreign-denominated debt.
Domestic and External Debt Trends
Data from the DMO revealed that domestic debt comprised 53% of Nigeria’s total public debt, while foreign debt accounted for 43% as of June 2024. Domestic debt rose by 8.5% within the second quarter, reaching ₦71.22 trillion, up from ₦65.65 trillion in March.
On the external debt front, there was a 1.9% increase, bringing the total to $42.90 billion by June. This figure included additional borrowing of $1.22 billion from the World Bank, offset slightly by a $418.8 million repayment to the International Monetary Fund (IMF).
In naira terms, external debt surged by 12.6% to ₦63.07 trillion during the same period due to an average exchange rate of ₦1,470.19/USD in Q2, compared to ₦1,330.26/USD in Q1.
On a year-over-year basis, total public debt grew by 53.7%, pushing the debt-to-GDP ratio to 50.8%. Analysts anticipate further increases as the Federal Government borrows to bridge the 2024 budget deficit and as currency depreciation continues to inflate the naira value of foreign debt.
“We project Nigeria’s total public debt to reach ₦144.34 trillion, or 54.6% of GDP, by the end of 2024,” Cordros said in its report.
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