Nigeria’s total public debt surged by ₦24.33 trillion within the first quarter of 2024, reaching a staggering ₦121.67 trillion ($91.46 billion), according to the Debt Management Office (DMO). This significant increase is primarily attributed to new borrowing aimed at part-financing the 2024 budget deficit.
As of March 31, 2024, the nation’s debt profile, encompassing both domestic and external obligations, stood at ₦121.67 trillion ($91.46 billion). This marks a notable rise from ₦97.34 trillion ($108.23 billion) recorded at the end of December 2023. The debt comprises borrowings by the Federal Government, the 36 state governments, and the Federal Capital Territory (FCT).
Breaking down the figures, the DMO reported that Nigeria’s domestic debt amounted to ₦65.65 trillion ($46.29 billion), while external debt stood at ₦56.02 trillion ($42.12 billion). The domestic debt saw an increase from ₦59.12 trillion in December 2023 to ₦65.65 trillion in March 2024.
A significant factor in the apparent reduction of the total debt in dollar terms, by $16.77 billion or 18.34%, was the depreciation of the naira. The DMO used an official exchange rate of ₦1,330/$ to convert external debts to naira, compared to ₦899.39/$ used in December 2023. This currency devaluation masked the actual growth in the debt figures.
Excluding the impact of the naira’s exchange rate fluctuations in the first quarter of 2024, the domestic debt experienced a substantial rise, attributed largely to new borrowings intended to cover the 2024 budget deficit and the securitization of a portion of the ₦7.3 trillion Ways and Means advances from the Central Bank of Nigeria.
The DMO highlighted, “The increase was from new borrowing to part-finance the 2024 Budget deficit and securitization of a portion of the ₦7.3 trillion Ways and Means Advances at the Central Bank of Nigeria.” The office also projected that while borrowing will continue as outlined in the 2024 Appropriation Act, anticipated improvements in government revenue should enhance debt sustainability.
President Bola Tinubu, on May 29, 2024, emphasized his administration’s resolve to reduce the nation’s dependency on borrowing for public expenditure and address the consequential burden of debt servicing on limited government revenues. Tinubu stressed the urgency of reversing the trend of using 90% of national revenue to service debt, describing it as an unsustainable path that could lead to national ruin.
“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 up from slumber and be respected among the world’s great nations,” Tinubu stated. He underscored the necessity for bold, albeit painful, decisions for the country’s long-term benefit and the future of upcoming generations.
On January 1, 2024, Tinubu signed into law the ₦28.7 trillion 2024 Appropriation Bill, which had been passed by the Senate. This budget was ₦1.2 trillion higher than the initial proposal submitted by the President to the National Assembly in November 2023. Dubbed the ‘Budget of Renewed Hope,’ the 2024 budget set an oil price benchmark at $77.96 per barrel with a daily production estimate of 1.78 million barrels.
Additionally, the budget pegged the naira at ₦750/$1. However, the naira experienced significant depreciation shortly after, plummeting to nearly ₦2,000/$1 by February 2024. The currency’s instability persisted, trading at approximately ₦1,500/$1 by mid-year, a situation exacerbated by the unification of the foreign exchange windows.
The current debt scenario accentuates the critical need for Nigeria to diversify its revenue sources, manage its fiscal policies more effectively, and implement structural reforms to ensure sustainable economic growth and financial stability.
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