Nigeria’s Debt Jumps 75.3% to N87.38trn in Q2 CBN Loan Securitization, Naira Float

By Adedapo Adesanya

The Debt Management Office (DMO) has said Nigeria’s total public debt rose by 75.3 per cent to N87.38 trillion at the end of the second quarter of 2023 against N49.85 trillion recorded in the first quarter of the year.

In the report published by the debt office on Thursday, there was a N37.53 trillion rise in the country’s internal and external debt in three months, the final quarter of President Muhammadu Buhari’s tenure.

The rise came as the country securitised the N22.71 trillion Ways and Means Advances of the Central Bank of Nigeria to the federal government. The overdraft is a loan facility through which the CBN finances the shortfalls in the government’s budget.

This also happened as the country liberalised the exchange rate in mid-June, a move that saw the Naira drop by over 40 per cent.

The DMO stated, “Nigeria’s total public debt stock as at June 30, 2023, was N87.38 trillion ($113.42 billion). It comprises the total domestic and external debts of the Federal Government of Nigeria, the thirty-six states, and the Federal Capital Territory.

“The major addition to the Public Debt Stock was the inclusion of the N22.712 trillion securitized FGN’s Ways and Means Advances.”

The statement also noted that other additions to the debt stock were new borrowings by the federal government and the sub-nationals from local and external sources.

It added, “The reforms already introduced by the present administration and those that may emerge from the recommendations of the Fiscal Reform and Tax Policies Committee are expected to impact debt strategy and improve debt sustainability.”

Business Post had earlier reported that the DMO projected that Nigeria’s public debt burden may hit N77 trillion following the National Assembly’s approval of the request by former President Muhammadu Buhari to restructure the CBN’s Ways and Means Advances.

The Director-General of the DMO, Ms Patience Oniha, during a public presentation of the 2023 budget organised by the former Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, noted that the debt would be N70 trillion without N5 trillion new borrowing and N2 trillion promissory notes.

However, the latest data showed that the current debt stock of N87.38 trillion exceeded the DMO’s projection (N77.33 trillion) by N10.38 trillion.

Further breakdown showed that Nigeria has a total domestic debt of N54.13 trillion and a total external debt of N33.25tn.

While the domestic debt makes up 61.95 per cent of total debt, the external makes up 38.05 per cent.

The domestic debt rose by 79.18 per cent from N30.21 trillion, while the external debt rose by 69.28 per cent from N19.64tn in Q1 2023.

In its 2022 Debt Sustainability Analysis Report, the DMO warned that the Federal Government’s projected revenue of N10 trillion for 2023 could not support fresh borrowings.

According to the office, the projected government’s debt service-to-revenue ratio of 73.5 per cent for 2023 is high and a threat to debt sustainability.

It noted that the government’s current revenue profile could not support higher levels of borrowing.

DMO has tasked the country to desist from borrowing and urged the government to encourage the private sector to fund some of the capital projects that were being financed from borrowing through the public-private partnership schemes.

It added that the federal government can reduce borrowing through the privatisation and/or sale of government assets.

Over the years, Nigeria’s low revenue generation has pushed the government to more borrowing.

However, President Bola Tinubu recently expressed his administration’s commitment to break the cycle of overreliance on borrowing for public spending and the resultant burden of debt servicing it places on the management of limited government revenues.

According to the Minister of Finance, Mr Wale Edun, the federal government has no intention to borrow from any local or foreign organisation as it is interested in boosting taxes and other revenue outlets.

“The federal government is not in a position to borrow at this time. Rather, the emphasis has to be on creating a stable macroeconomic environment. Stable inflation, stable exchange rate, an environment within which people can come and invest and thereby increase production and further grow the economy. Improve and create jobs and reduce poverty,” he said at the last Federal Executive Council (FEC) in August.