Modest Q/Q Increase in Public Debt Stock


September 23, 2022/Coronation Research

According to Nigeria’s Debt Management Office (DMO), Nigeria’s total public debt rose by 3% q/q or N1.2trn to N42.8trn at end-June ’22 from N41.6trn at end-March ‘22. On a y/ y basis, total public debt increased by 20.8%. As at end-June ‘22, public debt is equivalent to 25% of 2021 nominal GDP.

This is relatively low when compared with other African economies such as Ghana (82%), Kenya (68%), South Africa (80%) and Egypt (90%). This is in line with the DMO’s debt management target of a debt-to-GDP ratio of 40% for the period 2020-2023 and below the limit of 55% set by the World Bank for countries within Nigeria’s peer group. It is also below the 70% set by the Economic Community of West African States.  

Total domestic debt increased by 5% q/q and 20.6% y/y to N26.2trn as at end-June ‘22. This can be partly attributed to increases in FGN bonds (6.7% q/q), NTBs (2.2% q/q) and FGN Savings bond (15.2% q/q). Total domestic debt accounts for 61% of total public debt (endJune ’22).

Within domestic debt, FGN instruments accounted for 80% of total domestic debt, while subnationals represent 20%. Bonds and NTBs accounted for 94% of total FGN domestic debt while FGN sukuk, treasury bond, savings bond, green bond, and promissory notes collectively contributed 6% to the total.

The share of states and the FCT’s domestic debt increased by 9% q/q to N5.3trn at endJune ‘22 from N4.8trn recorded in the previous quarter. On a y/y basis, it increased by 28%. The most indebted states were Lagos (N797bn), Delta (N379bn) and Ogun (N241bn). As at end-July ‘22, the stock of CBN’s ways and means advances stood at N20.1trn. Given the expected securitisation of the ways and means advances from the CBN as well as potential addition of AMCON debt, the domestic debt stock is likely to increase.

External debt stock stood at USD40.1bn (N16.6trn) as at end-June ‘22. This represents a slight increase of 0.2% or USD96m q/q. The marginal increase in external debt stock can be attributed to upticks in loans from International Development Association (2.8% q/q), China (7.1% q/q), India (11.2% q/q), among others. Furthermore, the marginal increase reflects Nigeria’s absence from the international capital market, due to worsening external financing conditions as advanced economies tighten monetary policy to combat rising inflation. Overall, the external debt stock accounts for 39% of total public debt.

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