Nigeria’s total public debt surged to N144.67 trillion (approximately $94.23 billion) as of December 31, 2024, marking a 48.58% increase from the N97.34 trillion ($108.23 billion) recorded at the close of 2023. This substantial year-on-year growth, amounting to over N47 trillion, reflects the persistent expansion of the country’s debt burden, driven by both external and domestic borrowing.

The data was released in the latest report by the Debt Management Office (DMO), which also pointed to a quarter-on-quarter rise of 1.65%, from N142.32 trillion ($88.89 billion) in September 2024 to the year-end figure, underscoring continued accumulation in the final quarter.

External Debt Skyrockets by 84%, Fueled by New Loans and Naira Weakness

A deeper look at the figures reveals that external debt was the primary driver behind the overall debt surge. Nigeria’s foreign debt stock rose by an astonishing 83.89%, climbing from N38.22 trillion ($42.50 billion) in December 2023 to N70.29 trillion ($45.78 billion) a year later.

The sharp increase can be traced to two key factors:

• The acquisition of new external loans throughout 2024.

• The depreciation of the naira, which inflated the local currency value of dollar-denominated debt.

This growing exposure to foreign currency liabilities raises the country’s vulnerability to exchange rate volatility, potentially making debt servicing more expensive in future fiscal periods.

Domestic Borrowing Also Expands, Though at a Slower Pace

While not as dramatic as external borrowing, domestic debt also grew substantially, rising by 25.77% within the same one-year period. The total climbed from N59.12 trillion ($65.73 billion) in December 2023 to N74.38 trillion ($48.44 billion) by December 2024.

The Federal Government was the main contributor to this increase. Its domestic debt portfolio expanded from N53.26 trillion to N70.41 trillion, representing a 32.19% rise as the government continued to rely heavily on local borrowing to finance budget deficits, infrastructure projects, and social programs.

In contrast, domestic debt held by states and the Federal Capital Territory (FCT) declined from N5.86 trillion to N3.97 trillion, a notable 32.27% drop, suggesting a more cautious approach to debt accumulation by some subnational governments during the year.

Quarterly Trends Reflect Continued Borrowing Momentum

On a quarter-by-quarter basis, total public debt rose by N2.35 trillion, or 1.65%, from the N142.32 trillion figure recorded on September 30, 2024. This increase was again driven by both domestic and external components:

• External debt grew by N1.4 trillion, moving from N68.89 trillion ($43.03 billion) in September to N70.29 trillion ($45.78 billion) in December, due to new borrowing and further weakening of the naira.

• Domestic debt also rose, albeit more modestly, by 1.29%, from N73.43 trillion ($45.87 billion) to N74.38 trillion ($48.44 billion).

During this quarter, the Federal Government’s local borrowing rose from N69.22 trillion to N70.41 trillion, while state and FCT domestic debt fell from N4.21 trillion to N3.97 trillion, a 5.69% reduction.

Debt Composition Remains Balanced, But Risks Are Rising

As of the end of 2024, external debt made up 48.59% of Nigeria’s total public debt, while domestic debt accounted for 51.41%, indicating a relatively balanced debt structure between foreign and local sources.

However, analysts warn that the steep increase in external obligations reflects a growing dependence on foreign borrowing to finance the government’s fiscal needs. With the naira continuing to weaken, the cost of servicing foreign debt is expected to rise, placing added pressure on Nigeria’s already stretched public finances.

A breakdown of the debt distribution shows:

• The Federal Government accounted for N62.92 trillion ($40.98 billion) of the external debt and N70.41 trillion ($45.86 billion) in domestic debt.

• States and the FCT held N7.37 trillion ($4.80 billion) in external debt and N3.97 trillion ($2.58 billion) in domestic debt.

Mounting Debt Sparks Fiscal Sustainability Concerns

The latest debt figures have reignited concerns among economists and policy analysts over the sustainability of Nigeria’s fiscal path. The nearly 49% rise in public debt within a single year—particularly the 84% jump in foreign debt—highlights significant exposure to global economic risks, including interest rate shifts, debt rollover pressures, and currency depreciation.

As Nigeria grapples with revenue shortfalls, subsidy pressures, and rising inflation, managing the growing cost of debt servicing will be crucial to avoiding a fiscal crisis. Servicing debt already consumes a sizable portion of the government’s budget, leaving limited fiscal space for essential public investments in health, education, and infrastructure.

While domestic borrowing allows for more control and less currency risk, it often comes with higher interest rates, crowding out private sector credit and dampening economic growth.

Looking Ahead: The Urgent Need for Revenue Expansion and Fiscal Reform

To address the ballooning debt profile, analysts stress the need for:

• Aggressive domestic revenue mobilization, including tax reform and improved compliance.

• Rationalization of government spending to reduce fiscal deficits.

• A review of debt procurement strategies to prioritize concessional funding over expensive commercial loans.

• Stronger measures to stabilize the naira and mitigate currency-driven debt inflation.

As Nigeria moves into 2025 with a record-high debt load, the challenge will be balancing the need for growth-stimulating investments with the imperative of debt sustainability. Without decisive fiscal reforms and a credible medium-term debt strategy, the country risks drifting deeper into a debt trap, with long-term implications for macroeconomic stability.