The federal and state governments seem to have found a way round the huge public debts of the last few years with the foreign debts owed by the centre falling to $94.22bn at the end of last year, from $113.42bn in 2023.
The combined domestic public debts of the states have also gone down to N3.97 trillion from N5.82 trillion, according to figures just released by the National Orientation Agency (NOA).
The agency, in an update on the nation’s debt profile, said the huge reduction in public debts resulted from the economic reforms embarked upon by the Tinubu administration, particularly petrol subsidy removal and naira floating.
“These policies boosted revenues, enabling 33 states and the FCT to repay ₦1.85 trillion in domestic debt, slashing total state debts from N5.82 trillion to N3.97 trillion,” it said.
Delta State slashed off N265.83bn from its debt while Jigawa reduced its own by 96 per cent.
It said federal government’s external debt servicing improved (revenue-to-debt ratio: 97 per cent to 65 per cent), with IMF debt cleared this month.
It recalled how the states, back in 2014, began to experience acute cash crunch arising from inadequate revenue allocation from Abuja, which made it hard for 30 of them to meet their financial obligations to civil servants.
The states thus resorted to borrowing money, such that by the end of that year, the total debt stock of the 36 states and the Federal Capital Territory (FCT) had reached N1.66 trillion, then grew up to N2.5 trillion in 2015 and N5.82 trillion by June 30, 2023.
Osun State, for instance, moved from a debt profile of N37.82 billion in 2014 to N145.71 billion in June 2023 while Delta, despite being one of the highest recipients of revenue allocation from the centre, moved from N211.95 billion debt in 2014 to N465.41 billion in 2023.
From a debt profile of only N1.57 billion in 2014, Jigawa State’s rose to N43.13 billion in June 2023 and Anambra from N2.88 billion to N76.4 billion.
However, the turning point, according to the NOA, came in the aftermath of the petrol subsidy removal and the floating of the naira.
Thus, the 36 states, the FCT and the 774 local governments, which received a total of N4.792 trillion as allocations in 2022, got N6.16 trillion in 2023; an increase of 28.6 per cent.
Their financial situation went a notch higher in 2024 when they received a total of N9.58 trillion from the federation account.
It said: “The fallout of this financial windfall for the states and local governments is increased solvency and financial liquidity, thus clearing the coast for better budget financing without any recourse to expensive borrowing.
“Consequently, many states embarked on debt repayment sprees.
“As records from the Debt Management Office (DMO) have shown, within a space of 18 months, the total debt stock of the 36 states and FCT fell from a record N5.82 trillion in June 2023 to N3.97 trillion by the end of December 2024.
Delta has reduced its debt by more than 50 per cent within 18 months after repaying N265.83 billion out of N465.4 billion.
It is trailed by Lagos State which paid N96.23 billion. Others in the ranks of states that have been settling their debts are Imo, Cross River and Ogun.
Jigawa reduced its debt profile by 96 per cent within 18 months after repaying N41.8 billion out of the N43.13 billion it owed while Ondo State cut its own debt profile by 82 per cent.
It currently has a debt hangover of N12 billion after paying off N61.6 billion out of N74 billion.
Niger, Rivers and Enugu are the only states said to have failed to reduce their debts.
The three of them reportedly borrowed more money.
The federal government spent $4.67 billion in 2024 to service its external debts as against the $3.5 billion spent in 2023
The Tinubu administration committed $7 billion to external debt servicing within its first 18 months in office.
The NOA said: “As at June 30, 2023, a month after the President assumed office, Nigeria’s indebtedness to IMF (International Monetary Fund) stood at $3.264 billion.
Six months after, specifically in December 2023, Nigeria’s IMF debt had shrunk to $2.469 billion.
“One more year later (December 2024), Nigeria further reduced its indebtedness to IMF to only $800.23 million.
“This $800.23 million balance at the end of 2024 has now been totally cleared in the second quarter of 2025 as confirmed by IMF.
“Not done yet, the federal government is also increasingly paying off the N22 trillion securitised Ways and Means arrears it owes the Central Bank of Nigeria (CBN).
“More importantly, it has stopped getting new ways and means advance from the CBN.
“Rather, it has opted to raise money from the financial market to finance its budget deficit.”
