Economy
Nigeria’s Debt to Hit N150 Trillion in 2025-Expert
Nigeria’s debt stock is projected to hit N150 trillion by the end of the first quarter of this year. This follows the release of Nigeria’s debt profile of N143.02 trillion by the Debt Management Office (DMO).
An economic analyst has indicated that this new debt level will coincide with Nigeria’s plans to issue three bond categories to raise N450 billion this year.
Nigeria’s public debt is expected to reach a new high of N150 trillion by the end of the first quarter of this year, up from N142 trillion as of September 31, 2024. This forecast is based on the latest figure of N142 trillion released by the Debt Management Office (DMO).
The depreciation of the naira has contributed to the increase in debt. DMO data shows that Nigeria’s public debt rose to N142.3 trillion as of September 30, 2024, an increase of 5.97%. This represents an increase of N8.02 trillion compared to N134 trillion in June 2024.
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This projection comes as the Nigerian government, through the DMO, plans to generate N450 billion through its January 2025 bond auction. The proposed auction includes three bond categories: a five-year bond with a 19.30% coupon rate, to be issued in April 2029, with a planned N100 billion raise from reopening; a seven-year bond issued in February 2031, with an 18.50% coupon rate, aiming to secure N150 billion; and a 10-year bond to be issued in January 2035, targeting N200 billion.
These bonds form a substantial part of the government’s domestic borrowing plans. The DMO stated that the auction will take place on Monday, January 27, 2025, with the settlement date on January 29, 2025. The settlement ensures that successful bidders take ownership of the bonds immediately after the auction date, allowing them to start earning interest quickly.
The National Bureau of Statistics (NBS) reports that Nigeria’s debt per capita is now about N691,502. A data review by the national statistics body shows that debt owed by each Nigerian averages N619,000 as of the second quarter of 2024.
Nigeria’s debt service costs, both external and domestic, increased in Q3 2024, reflecting the combined effect of increased external debt service payments and currency devaluation. During the review period, the total debt service cost reached an estimated N3.57 trillion, an increase of N60 billion or 1.71% from N3.51 trillion in the second quarter. According to figures from the Debt Management Office (DMO), external debt service payments in the review quarter amounted to $1.34 billion, translating to N2.14 trillion at the exchange rate of N1,601.03 per dollar.
The new debt level reflects the combined effects of rising domestic borrowing and the impact of the naira devaluation on external debt in terms of local currency. Information from the DMO shows that Nigeria’s external debt in dollar terms rose slightly by 0.29% from $42.90 billion in June to $43.03 billion in September 2024. The naira equivalent of external debt surged by 9.22%, from N63.07 trillion to N68.89 trillion in the same period. This rise was caused by the naira depreciation as the exchange rate weakened from N1,470.19 per dollar in June to N1,601.03 as of September last year.
Daily Trust quotes economic expert Paul Alaje, who predicts that the debt profile may reach N150 trillion by the end of March this year. According to Alaje, one of Nigeria’s seven macroeconomic indicators and other parameter projections for the new year suggest that the country’s debt profile may balloon to N150 trillion by March this year.
