As of December 31, 2024, Nigeria's total public debt has reached a staggering N144.67 trillion (approximately $94.23 billion). This represents a significant 48.58% surge from the N97.34 trillion ($108.23 billion) recorded just a year prior, according to a recent report from the Debt Management Office (DMO) released on April 4. This rapid increase not only underscores the growing magnitude of Nigeria's financial obligations but also raises pressing questions about the sustainability of such debt levels.
The DMO's report reveals several critical trends. Firstly, there was a quarter-on-quarter increase of 1.65% in Nigeria's total public debt, moving up from N142.32 trillion ($88.89 billion) as of September 2024. This consistent upward trajectory in debt levels throughout the last quarter of the year signals escalating financial challenges for the nation.
The report attributes the surge in public debt primarily to substantial increases in both external and domestic borrowings. Nigeria's external debt witnessed an alarming rise of 83.89%, climbing from N38.22 trillion ($42.50 billion) in December 2023 to a staggering N70.29 trillion ($45.78 billion) by the end of 2024. This escalation is largely linked to new external borrowings, compounded by the depreciation of the naira, which inflated the naira value of dollar-denominated loans.
On the domestic front, debt increased by 25.77%, soaring from N59.12 trillion ($65.73 billion) to N74.38 trillion ($48.44 billion) during the same period. Notably, the Federal Government's domestic debt rose from N53.26 trillion to N70.41 trillion, a striking 32.19% jump. This trend illustrates a growing dependence on local borrowing to mitigate budget deficits and finance infrastructure development.
Interestingly, domestic debt held by states and the Federal Capital Territory (FCT) saw a reduction, dropping from N5.86 trillion to N3.97 trillion, reflecting a 32.27% decline. The DMO interprets this decrease as a potential sign of a more cautious approach by subnational governments regarding debt accumulation.
Between September and December 2024, Nigeria's public debt rose by N2.35 trillion. The external debt specifically increased by N1.4 trillion, while domestic debt experienced a slight growth of 1.29%. Specifically, the Federal Government's domestic debt rose from N69.22 trillion to N70.41 trillion, contrasting with a decline in state and FCT debt.
By the end of 2024, external debt constituted 48.59% of Nigeria's total public debt, with domestic debt accounting for 51.41%. This relatively balanced debt structure has garnered attention, particularly as analysts voice concerns regarding the increasing reliance on foreign debt to address funding shortfalls.
The breakdown of external debt reveals that the Federal Government is responsible for N62.92 trillion ($40.98 billion), while states and the FCT hold N7.37 trillion ($4.80 billion). For domestic debt, the Federal Government owes N70.41 trillion ($45.86 billion), while states and the FCT account for N3.97 trillion ($2.58 billion).
The findings from the DMO have sparked renewed worries among economists about Nigeria’s fiscal health moving forward. The substantial rise in external debt highlights an increased vulnerability to fluctuations in exchange rates and shifts in global economic conditions. With the naira's ongoing depreciation, the costs associated with servicing Nigeria's foreign debt may continue to rise, potentially placing further strain on the country's public finances.
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