Nigeria’s Overall Public Debt Jumps by 15.64% To ₦33.107 Trillion

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Nigeria’s Overall Public Debt Jumps by 15.64% To ₦33.107 Trillion

 

NaijaNews Nigeria June 11, 2021

 

NaijaNews Nigeria reports that Nigeria’s gross debt stock grew year-on-year to N33.11 trillion by 15.64% in March 2021 according to the Debt Management Bureau (DMO) (from N28.63 trillion as of March 2020).

 

The y-o-y increase in the country’s total public debt stock was largely owing to a 24.86 percent growth in external debt to N12.47 trillion (or USD32.86 billion at N379.50/USD) as of March 2021 from N9.99 trillion (or USD27.67 billion at N361.00/USD) in March 2020.

Nigeria received loans from the International Monetary Fund in the amount of USD 3.48 billion in the space of a year. Moreover, the IDA has received an extra loan of USD 1.43 billion. Moreover, Naira’s greenback devaluation aggravated the external debt; y-o-y, Naira was 5.10% off the USD as at N3 79.50/USD in March 2021.

 

During the review quarter, Nigeria paid a portion of USD 642 million of the bilateral (USD 81.05 million), USD 61.38 million, and USD 500 million of its commercial loans.

Hence, external debt service payments fell to N126.02 billion (or USD332.07 million) in Q1 2021 from N170.60 billion (or USD472.57 million) printed in Q1 2020. Further breakdown of the total external debt stock in Q1 2021, showed that Multilateral loans accounted for 54.26% (USD17.83 billion) of which loans from the International Development Association (IDA) was USD11.09 billion, loan from IMF was USD3.48 billion while others stood at USD3.26 billion.

Bilateral loan accounted for 12.73% (USD4.18 billion) of which loan from China (Exim Bank of China) was USD3.40 billion and loan from France was USD0.49 billion in Q1 2021. Commercial loans accounted for 32.47% (USD10.66 billion) of which Eurobonds was USD10.37 billion while Diaspora bond was USD0.30 billion. Local debt stock increased by 10.71% to N20.64 trillion in Q1 2021 (from N18.64 trillion in Q1 2020).

Breakdown of the domestic debt figure showed that FG’s domestic debt stock rose to N16.51 trillion in Q1 2021 (from N14.53 trillion in Q1 2020). Despite the significant rise in FG’s domestic loan, local debt service payment increased marginally by 0.59% to N612 billion in Q1 2021 from N609.13 billion recorded in Q1 2020 amid a relatively low rate.

We expect Nigeria’s local debt and the annualized implicit interest rate (8.92%) to increase in 2021 given the President’s request to the National Assembly to approve N2.34 trillion new capital raising.

Also, the rising domestic interest rate environment witnessed in recent times will further exert upward pressure on debt service. Meanwhile, as Nigeria turns to IMF for more loans, it may have to learn more on market-driven exchange rate policy – which may further have a pass-through effect on the inflation rate.

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