The latest debt data report by the Debt Management Office (DMO) shows that Nigeria’s total debt stock stood at $91.46 billion in Q1 2024, an equivalence of N121.67 trillion at the exchange rate of N1,330 per dollar.
In Naira terms, this is a 24.99 percent (N24.33 trillion) increase over the N97.34 trillion recorded in Q4 2023 and a 144.07 percent (N71.82 trillion) increase over the N49.85 trillion of Q1 2023.
Conversely, in dollar terms, the total debt stock declined by 15.49 percent from $108.23 billion in Q4 2023, indicating that the Naira devaluation contributed partly to the sharp rise in the naira value of the debt stock.
Furthermore, the securitization of the N7.3 trillion Ways and Means at the CBN and increased domestic borrowing to finance the 2024 budget deficit contributed to the increase in the naira value of the debt stock.
External debt amounted to 46.05 percent (N56.02 trillion) of total debt, while domestic debt amounted to 53.95 percent (N65.64 trillion).
Nigeria’s rising public debt profile and the ensuing effects of spending mostly on debt servicing have prevented it from adequately addressing its numerous developmental issues.
Given the impact of currency depreciation on debt stock, there is a need for the Central Bank of Nigeria (CBN) to partner with the fiscal authority to design a framework that will prevent further free fall of the naira.
Otherwise, the debt management strategy should be adjusted while minimising external loans, usually in foreign currencies. If Nigeria’s debt continues to grow without corresponding economic expansion, the country may face a debt distress. [CSEA]
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