The Debt Management Office (DMO) Wednesday clarified that Nigeria’s fresh borrowing was N7.71 trillion in the first quarter of 2024.
It explained that the fresh borrowing includes N2.81 trillion as part of the new domestic borrowing of N6.06 trillion provided in the 2024 Appropriation Act and N4.90 trillion as part of the securitization of the N7.3 trillion Ways and Means Advances approved by the National Assembly.
The DMO made the clarification in a statement titled, “Explaining the Q1 2024 Public Debt Data,” saying the N24.33 trillion increase in the total debt was a result of a combination of fresh borrowing and naira devaluation.
The DMO noted that the exchange rate shifted from N899.39/$1 in Q4 2023 to N1,330.26/$1 in Q1 2024 which represents a depreciation of 32.39%, causing the naira value of external debt to rise sharply despite the actual dollar-denominated debt remaining relatively stable.
In Q1 2024, the total public debt in naira terms stood at N121.67 trillion, up from N97.34 trillion in Q4 2023.
The DMO explained that while the total external debt stock remained almost flat in dollar terms, the naira value surged due to the devaluation.
Since about N7.71 trillion was fresh borrowing, it means that about N16.62 trillion increase in total debt was due to naira devaluation.
This N16.62 trillion increase, combined with new domestic borrowing of N7.71 trillion, accounts for the total spike in Nigeria’s public debt stock.
The statement read: “Returning to the trend in the Total Debt Data between Q4, 2023, and Q1, 2024, the increase in Naira Terms of N24.33 trillion is being misinterpreted as New Borrowing. The amount actually represents New Borrowing of N2.81 trillion as part of the New Domestic Borrowing of N6.06 trillion provided in the 2024 Appropriation Act, New Domestic Borrowing of N4.90 trillion as part of the securitization of the N7.3 trillion Ways and Means Advances approved by the National Assembly, as well as, the depreciation in the official Naira Exchange Rate from USD/899.39 in Q4, 2023 to USD/N1,330.26 in Q1, 2024.
“Consequently, whereas, the Total External Debt Stock was relatively flat at USD42.50 billion and USD42.12 billion in Q4, 2023, and Q1, 2024 respectively, the Naira values were significantly different at N38.22 trillion and N56.02 trillion respectively, representing a difference of N17.8 trillion. This explains the perceived sharp increase of N24.33 trillion in the Total Debt Stock in Q1, 2024. The difference in the Exchange Rate for the two (2) periods also explains why in US Dollar Terms, the Total Debt Stock actually declined in Q1, 2024 (USD91.46 billion) when compared to Q4, 2023 (USD97.34 billion).”
