The Federal Government of Nigeria has exhibited a decreased appetite for foreign loans, marking a notable shift in the country’s debt dynamics.
The latest data from the Debt Management Office (DMO) has revealed that Nigeria’s total public debt climbed to N87.91 trillion by the end of September.
Contrary to the previous pattern of augmenting foreign debt, a substantial reduction in the overall foreign debt was witnessed.
The third quarter of 2023 saw Nigeria’s total public debt rise marginally by 0.61% to N87.91 trillion from N87.38 trillion reported at the close of the second quarter.
This revelation stems from the freshly released debt stock data from the Debt Management Office, outlining that the total external debt amounted to N31.98 trillion, while domestic debt stood at N55.93 trillion during the reported period.
Explaining the nuanced trend, the DMO stated, “At N87.91 trillion, the total public debt stock represents a marginal increase of 0.61% when compared to the June 30, 2023, figure of N87.38 trillion.”
The decrease in external debt was attributed to the redemption of a $500 million Eurobond and the payment of $413.859 million as the first principal payment of the $3.4 billion loan obtained from the International Monetary Fund in 2020 during the COVID-19 pandemic.
In the third quarter of 2023, the Federal Government allocated $1.39 billion to service external debt and N1.79 trillion for domestic debt servicing.
Despite numerous concerns and discussions surrounding Nigeria’s debt status, the DMO emphasized that the recent debt servicing showcased the government’s commitment to meeting its debt obligations.
Patience Oniha, the Director-General of the Debt Management Office, shed light on the prevailing economic conditions, stating, “For the international market, rates on blue-chip securities, the US government, the UK government, are high because of the inflation rate.”
She emphasized that the government has been focusing more on the domestic market, where it raised N7.04 trillion in new domestic borrowing in 2023.
The liquidity in the domestic market has been encouraging, and the government is expected to continue its engagement in the domestic market in 2024.
Oniha reiterated the importance of improving revenue, stating, “If you increase revenues, clearly your need for borrowing will be reduced. With your revenues, you can provide more services.”
The Finance Minister and Coordinating Minister for the Economy, Wale Edun, had earlier emphasized the necessity of enhancing revenue, as the country cannot afford to rely solely on borrowing in the future.
The Minister of Budget and Economic Planning, Abubakar Bagudu, echoed this sentiment, stating that revenue generation remains a major challenge for Nigeria’s fiscal viability.
As the country grapples with revenue challenges, the government’s focus on fiscal reforms, tax policies, and revenue generation initiatives takes center stage.
The recent debt data highlights the intricate balance the government must navigate to ensure fiscal sustainability in the face of evolving economic conditions.