Nigeria’s domestic debt stock has surged to N66.957 trillion as of mid-2024, marking an 8.74% increase from the previous quarter. The rise reflects an additional N5.379 trillion in debt accumulated through FGN Bonds, Treasury Bills, Savings Bonds, and Promissory Notes issued by the Debt Management Office (DMO) and the Central Bank of Nigeria (CBN). This follows a notable increase in debt during Q1 2024, driven by the government’s efforts to address a growing budget deficit and the CBN’s inflation control measures.
The government’s urgent need to finance a budget deficit, initially set at N9.1 trillion but later expanded to N15.3 trillion with a supplementary budget, has been a primary factor behind the borrowing surge. The CBN’s policy to absorb excess liquidity by raising interest rates has also contributed, though it has led to higher debt servicing costs. Despite a broad monetary tightening strategy, the Nigerian money supply (M3) grew significantly, further driving the demand for government securities.
FGN Bonds remain the dominant form of debt, accounting for 78.13% of the total domestic debt. Other instruments like Treasury Bills and Promissory Notes also contributed to the rise in debt levels. With fiscal pressures mounting, Nigeria is expected to increase borrowing, including through new “domestic dollar bonds,” as the government continues to rely on domestic financing to manage its budget amidst economic challenges.
