By Chinwendu Obienyi
Economic experts have renewed calls for improved debt management policies in Nigeria, following the country’s mounting debt burden of N144.7 trillion as of December 2024, highlighting the urgent need for integrated strategies to address fiscal imbalances and ensure long-term sustainability.
Latest figure disclosed by the Debt Management Office (DMO) in its report on the country’s public debt profile yesterday revealed that Nigeria’s total public debt rose to N144.67 trillion ($94.23 billion) as of December 31, 2024, reflecting a significant increase of 48.58 per cent compared to N97.34 trillion ($108.23 billion) recorded at the end of December 2023.
The report also indicated a quarter-on-quarter rise of 1.65 per cent from the N142.32 trillion ($88.89 billion) recorded at the end of September 2024, highlighting the continued increase in the nation’s debt burden within the final quarter of the year.
The surge in public debt was driven primarily by significant increases in both external and domestic borrowings. Nigeria’s external debt rose substantially by 83.89 per cent from N38.22 trillion ($42.50 billion) in December 2023 to N70.29 trillion ($45.78 billion) in December 2024.
This sharp increase was largely attributed to new external borrowings obtained during the year, as well as the impact of the naira depreciation, which inflated the naira equivalent of dollar-denominated debt.
Domestic debt also witnessed considerable growth, increasing by 25.77 per cent from N59.12 trillion ($65.73 billion) at the end of December 2023 to N74.38 trillion ($48.44 billion) in December 2024.
Similarly, the Federal Government’s domestic debt component rose significantly from N53.26 trillion to N70.41 trillion, a growth of 32.19 per cent, reflecting the government’s continued reliance on local borrowing to finance budget deficits and infrastructure projects.
Conversely, the domestic debt owed by states and the Federal Capital Territory (FCT) saw a reduction from N5.86 trillion to N3.97 trillion, representing a decline of 32.27 per cent.
The reduction in state-level borrowing indicates a cautious approach by some subnational governments towards debt accumulation within the year.
Compared to the preceding quarter, Nigeria’s total public debt rose by N2.35 trillion, translating to a 1.65 per cent increase from N142.32 trillion reported as of September 30, 2024. The marginal rise within the quarter was driven by increases in both external and domestic debt components.
External debt grew by N1.4 trillion, moving from N68.89 trillion ($43.03 billion) as of the end of September 2024 to N70.29 trillion ($45.78 billion) in December 2024.
The increase within the quarter was influenced by additional foreign loans obtained in the last three months of the year, alongside the further weakening of the naira against major international currencies.
Commenting on the figure, economic experts who spoke to Sunday Sun, noted that the rising debt burden poses significant risks to Nigeria’s economic stability, including reduced investor confidence and constrained public spending on infrastructure and social services.
They added that without decisive action to implement these recommendations, Nigeria may face deeper economic challenges in 2025.
Head of Research at FSL Securities, Victor Chiazor, said that the sharp increase, particularly in external debt, highlights the vulnerability of the nation’s finances to exchange rate fluctuations and changes in global economic conditions.
“With the naira’s continued depreciation, the cost of servicing foreign debt could escalate, placing additional strain on the country’s financial resources”, he said.
Recommending several measures to address Nigeria’s growing debt burden, Chiazor said, “The FG could look at expanding the tax base. Improving collection efficiency could help achieve non-oil revenue targets and reduce reliance on borrowing. Furthermore, aligning monetary, fiscal, trade, and investment policies is critical to achieving macroeconomic stability and reversing the stagflation trend”.
On the domestic front, debt rose slightly by 1.29 per cent, from N73.43 trillion ($45.87 billion) in September 2024 to N74.38 trillion ($48.44 billion) by the end of December.
The Federal Government’s domestic debt increased from N69.22 trillion to N70.41 trillion within the quarter. However, domestic debt attributed to states and the FCT reduced from N4.21 trillion to N3.97 trillion, reflecting a 5.69 per cent decrease.
As of December 2024, external debt constituted 48.59 per cent of Nigeria’s total public debt, while domestic debt made up 51.41 per cent, indicating a relatively balanced debt structure. However, the continued increase in external borrowings suggests a growing reliance on foreign debt to bridge budgetary shortfalls.
The breakdown of external debt shows that the Federal Government accounted for N62.92 trillion ($40.98 billion), while states and the FCT held N7.37 trillion ($4.80 billion). In the domestic debt segment, the Federal Government held N70.41 trillion ($45.86 billion), with states and the FCT accounting for N3.97 trillion ($2.58 billion).
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