The latest data from Nigeria’s Debt Management Office reveals a significant shift in the country’s approach to borrowing, signaling a reduction in its external debt stock. As of the end of September 2023, Nigeria’s total public debt rose marginally to N87.91 trillion, with the domestic debt accounting for N55.93 trillion.
In the third quarter of 2023, Nigeria experienced a 0.61 per cent increase in its total public debt compared to the previous quarter, primarily attributed to a moderate increase in domestic debt and a decrease in external debt. This decline in external debt was influenced by the redemption of a $500 million Eurobond and the repayment of the first principal installment of the $3.4 billion loan obtained from the International Monetary Fund in 2020 during the Covid-19 pandemic.
Despite the rise in public debt, the Federal Government’s commitment to honoring its debt obligations is evident, with significant expenditures allocated to servicing both external and domestic debts. The Director-General of the Debt Management Office, Patience Oniha, highlighted the government’s focus on the domestic market, citing global uncertainties and high inflation rates affecting foreign investments.
While addressing the challenges of revenue generation, Oniha emphasized the need for increased revenue to reduce the country’s reliance on borrowing. Efforts to reform fiscal policies and taxation are crucial in improving revenue generation, ultimately lowering the debt-service to revenue ratio.
Government officials, including the Minister of Finance and Coordinating Minister for the Economy and the Minister of Budget and Economic Planning, have echoed the significance of addressing revenue constraints to ensure fiscal viability. The World Bank has also shown optimism in Nigeria’s potential to boost revenues and maintain debt levels within a sustainable range over the medium term through recent reforms and policy redirection.
Although Nigeria faces persistent revenue challenges, the government’s commitment to enhancing revenue generation and implementing fiscal reforms underscores its determination to achieve a more balanced fiscal structure and reduce reliance on borrowing in the long run.
