Nigeria’s Public Debt Skyrockets to N87.38tn, Prompting Concerns for Fiscal Sustainability
Abuja, Nigeria – In a recent report, the Debt Management Office (DMO) has revealed that Nigeria’s total public debt has surged to an astonishing N87.38tn at the close of the second quarter of 2023. This startling figure marks a monumental increase of 75.29 per cent, equivalent to N37.53tn, compared to the N49.85tn recorded merely three months earlier at the end of March 2023.
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The DMO’s report, released on Thursday, casts a spotlight on this mounting debt crisis. Notably, this public debt encompasses the significant sum of N22.71tn, attributed to Ways and Means Advances from the Central Bank of Nigeria (CBN) to the Federal Government. This financial practice has long been used to bridge budget shortfalls.
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As of June 30, 2023, Nigeria’s total public debt stock stands at N87.38tn, equivalent to $113.42bn in U.S. dollars. It encompasses the combined domestic and external debts of not only the Federal Government of Nigeria but also the thirty-six states and the Federal Capital Territory.
The most substantial contributor to this burgeoning Public Debt Stock is the inclusion of a staggering N22.712tn in securitized Federal Government’s Ways and Means Advances.
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The DMO’s statement further underlines that the debt situation is compounded by new borrowings made by both the Federal Government and sub-national entities, acquiring funds from both local and external sources. In a bid to address this issue, the DMO anticipates that reforms already set in motion by the present administration, as well as those potentially emerging from the recommendations of the Fiscal Reform and Tax Policies Committee, will positively impact debt management strategy and enhance debt sustainability.
Notably, the DMO had previously projected that Nigeria’s public debt burden could reach N77tn, primarily due to the National Assembly’s approval of the request to restructure the CBN’s Ways and Means Advances. This financial tool serves as a crucial means through which the CBN fills budgetary shortfalls.
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Patience Oniha, the Director-General of the DMO, expressed this outlook during a public presentation of the 2023 budget, organized by former Minister of Finance, Budget, and National Planning, Dr. Zainab Ahmed. At that time, it was anticipated that the debt would amount to N70tn, considering N5tn in new borrowing and N2tn in promissory notes. However, the latest data reveals that the current debt stock of N87.38tn surpasses the DMO’s initial projection by a staggering N10.38tn.
A detailed breakdown of the debt showcases Nigeria’s total domestic debt of N54.13tn, constituting 61.95 per cent of the total debt, while the external debt stands at N33.25tn, making up the remaining 38.05 per cent.
The exponential growth in Nigeria’s public debt has ignited concerns among experts and policymakers, raising questions about the nation’s capacity to effectively manage its debt obligations. As the government navigates these financial challenges, a delicate balance must be struck between securing necessary financing for development and ensuring the long-term sustainability of the country’s debt.
