Nigeria’s External Debt Expected to Rise to $45.1 Billion by End of 2024 Amid Fresh Borrowing Plans

November 17, 2024 admin

Nigeria’s external debt is expected to rise to $45.1 billion by the end of 2024. This development follows a recent report from the Debt Management Office (DMO), which disclosed an increase in Nigeria’s external debt stock by $780 million in the second quarter of 2024, from $42.12 billion in March to $42.9 billion by June.

Last week, the Federal Executive Council (FEC) approved a new borrowing plan amounting to $2.2 billion as part of the Federal Government’s 2024 Appropriation Act financing programme. The Minister of Finance, Wale Edun, further announced that the borrowing would involve a combination of Eurobond and Sukuk offerings, valued at $1.7 billion and $500 million, respectively.

Edun emphasised that Nigeria’s ability to access the international capital market reflects global confidence in President Bola Ahmed Tinubu’s economic reforms. The additional borrowing is expected to push the country’s external debt to $45.1 billion by the year’s end, raising concerns about Nigeria’s financial stability.

The new borrowing plans come amid rising debt servicing costs. According to the Central Bank of Nigeria, the country spent $3.58 billion servicing its foreign debt in the first nine months of 2024—a 39.77 percent increase compared to the $2.56 billion spent during the same period in 2023. The financial strain has sparked fears of a looming debt crisis, with Nigeria’s total debt stock reaching N134.3 trillion by the end of June 2024, as reported by the DMO in October.

However, Critics have voiced concerns over the escalating debt and its effects on the masses. Muda Yusuf, Director of the Centre for the Promotion of Private Enterprise (CPPE), described the situation as worrisome, highlighting Nigeria’s limited revenue capacity and persistent infrastructural challenges. “The government’s reliance on borrowing could strain the economy further, particularly if revenues do not improve significantly.”he noted.

Nigeria’s debt profile has become a central issue, with analysts closely watching how the Federal Government will manage the increased debt burden. The borrowing plans are seen as crucial to addressing Nigeria’s infrastructure gaps and boosting economic growth, yet questions remain over the country’s capacity to meet its debt obligations amid rising global economic uncertainty.

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