Nigeria’s External Debt Hits N66.14 Trillion in Q3 2024 Amid Growing Fiscal Pressures

In the third quarter of 2024, Nigeria’s external debt reached N66.14 trillion (approximately $43.03 billion), representing 23.14% of the nation’s GDP. This marks a 0.30% increase from the previous quarter and reflects a consistent upward trend in the country’s borrowing. Compared to the same period in 2023, external debt grew by 3.40%, signaling Nigeria’s ongoing reliance on foreign loans to manage fiscal challenges and fund key development projects.

The external debt is broken down into multiple sources: multilateral loans from institutions like the World Bank and IMF account for 50.60% ($21.77 billion), commercial loans, primarily from Eurobonds, make up 35.14% ($15.12 billion), and bilateral loans total 13.50% ($5.81 billion). The remaining 0.76% ($0.33 billion) comes from syndicated loans via the African Finance Corporation. These borrowing categories highlight the diversified approach Nigeria uses to finance its obligations.

Debt servicing also remains a significant concern. By September 2024, Nigeria had paid $1.34 billion in external debt service, with principal repayments totaling $0.72 billion and interest payments reaching $0.62 billion. Commercial borrowings account for the largest share of interest payments, highlighting the growing weight of private-sector debt. The continued rise in debt service payments presents a challenge for the country’s fiscal policy, especially as it grapples with increasing financial obligations.

Experts suggest that to reduce the strain of rising debt servicing, Nigeria may need to focus on increasing oil revenues, improving tax collection, and restructuring existing debts. The country faces a delicate balance between pursuing growth and managing debt sustainability, with the report underscoring the importance of fiscal discipline and investment in economic growth initiatives to mitigate the long-term risks of increasing external debt.

Source: naira metrics