"Public Debt: Nigeria\u2019s largest creditors as of December 2023"

" Public Debt: Nigeria\u2019s largest creditors as of December 2023\u00a0\u00a0 \r\n According to data from the Debt Management Office (DMO), the total public debt in Nigeria is an\u00a0 estimated N97.34 trillion ($108.23 billion) as of December 2023 . \r\n\r\n This figure was an increase of 146% from N39.56 trillion ($95.77 billion) at the end of the previous year.\u00a0 \u00a0 \r\n\r\n The major reason for the significant increase is the addition of CBN\u2019s N20 trillion ($48 billion) in Ways and Means lending to the government and about 60% devaluation of naira.\u00a0\u00a0 \u00a0 \r\n\r\n The federal and state governments owe a combination of domestic and foreign debts. Domestic debt is made up of FGN securities, treasury bills, and more recently, CBN\u2019s Ways and Means. On the foreign scene, \r\n\r\n Nigeria owes countries like China, France, Germany and Japan (bilateral debts) and multilateral institutions like the World Bank, International Monetary Fund (IMF), Islamic Development Bank (IsDB) and the African Development bank (AfDB).\u00a0 \u00a0 \r\n \u00a0 Domestic Debt \u00a0 \r\n The federal and state government mostly borrows money by issuing bonds to the domestic market in the local currency, the naira.\u00a0According to the data from the DMO, Nigeria\u2019s total domestic debt is about \u00a0 N59.12 \u00a0trillion out of which the states owe N5.86 trillion. \u00a0 The biggest sources of domestic debt as of December 2023 are FGN securities, making a total of N59.12 trillion, which make up\u00a0 40% of Nigeria\u2019s total debt . \u00a0 \u00a0 \r\n FGN Bonds N42.2 trillion (+169.5% YoY) \u00a0 \u00a0 \r\n \r\n \t These are long term bonds issues by the federal government and mostly used to finance the country\u2019s budget deficit.\u00a0 \u00a0 \r\n \t Nigeria\u2019s FGN Bonds increased 169.5% YoY mostly due to the addition of Ways and Means into the FGN Bonds. \u00a0 \u00a0 \r\n \t FGN Bonds are traded on the FMDQ, Nigeria\u2019s official market for trading government securities. It is also traded on the NGX, Nigeria premier markets for stocks and bonds.\u00a0 \u00a0 \r\n \t Among the holders of Nigeria\u2019s FGN Bonds include institutional investors, retail investors, foreign portfolio investors and domestic investors in general.\u00a0 \u00a0 \r\n \r\n Nigeria Treasury Bills N6.5 trillion (+47.5% YoY) \u00a0 \u00a0 \r\n \r\n \t These are short term securities issued by the government via the central bank. \u00a0 \r\n \t Treasury bills tenors are either 91 days, 182 days or 364 days attracting respective interest rates.\u00a0 \u00a0 \r\n \t The data reveals Nigeria has a total of N6.5 trillion in Treasury Bills as of December 2023 up from N4.4 trillion recorded same period 2022.\u00a0 \u00a0 \r\n \t Among the buyers of Nigeria\u2019s Treasury bills are institutional investors, foreign portfolio investors and high net worth individuals. \u00a0 \u00a0 \r\n \r\n Promissory Notes N1.33 trillion (+150.8% YoY) \u00a0 \r\n \r\n \t Nigeria\u2019s issuance of Promissory Notes increased by 150.8% year-over-year, reaching N1.33 trillion, indicating a robust utilization of this financial instrument. \u00a0 \r\n \t Nigerian government offer issue promissory notes to settle arrears, fund infrastructural projects and settle judgement debts. \u00a0 \r\n \t This year-over-year jump also underscores the government\u2019s reliance on these instruments to potentially ease liquidity constraints, implying that there may be an increasing number of contractors, pensioners, or other entities to whom the government owes money. \u00a0 \r\n \r\n FGN Sukuk Fund \u00a0 N1.09 trillion (+47.1% YoY) \u00a0 \r\n \r\n \t FGN Sukuk Fund in Nigeria grows to N1.09 trillion, an increase of 47.1% compared to the previous year\u2019s N742.56 billion.\u00a0 \u00a0 \r\n \t Sukuk bonds are usually used to funding for infrastructure projects like roads and bridges in the country.\u00a0 \u00a0 \r\n \t Funds raised by the DMO through the different Sukuks have been used to facilitate the construction and rehabilitation of over 4000 kilometers of roads and bridges in Nigeria. \u00a0 \r\n \r\n FGN Saving Bonds N39.18 billion (+42.4% YoY) \u00a0 \r\n \r\n \t Nigeria\u2019s FGN Saving Bonds rise to N39.18 billion, an increase of 42.4% increase year-over-year. \u00a0 \r\n \t It reflects greater public investment in government-backed savings, and indicates confidence in federal savings instruments. \u00a0 \r\n \t The DMO offers savings bonds monthly to interested investors. \u00a0 \r\n \r\n \u00a0 \u00a0 \r\n \u00a0 Foreign Debt \u00a0 \r\n The latest data as of December 2024, confirms Nigeria\u2019s total external debt balance is\u00a0 $42.5 billion (N38.22 trillion) , with states owing\u00a0 $4.61 billion (N4.15 trillion) \u00a0 \u00a0 \r\n\r\n Islamic Development Bank $238.17 million (+70.01% YoY) \u00a0 \r\n \r\n \t The Islamic Development Bank (IsDB) is a multilateral creditor. \u00a0 \r\n \t It has significantly increased its lending to $238.17 million as of December 23, marking a substantial year-over-year surge of 70.10% from the previous $140 million. \u00a0 \r\n \t This notable rise reflects the bank\u2019s growing engagement and support for developmental projects within its member countries. \u00a0 \r\n \r\n Africa Growing Together Fund $23.35 million (+28.50% YoY) \u00a0 \r\n \r\n \t Under the multilateral category, the Africa Growing Together Fund is managed by the African Development Bank (AfDB) \u00a0 \r\n \t It saw a positive change as the fund\u2019s contribution grew from $18.17 million to $23.35 million, an encouraging 28.50% increase year-over-year. \u00a0 \r\n \t This uptick signals an expanded commitment to fostering sustainable growth on the continent. \u00a0\u00a0 \u00a0 \r\n \r\n Exim Bank of China $5.17 billion (+20.30% YoY) \u00a0 \r\n \r\n \t In the bilateral category, the Exim Bank of China continues to play a crucial role in financing development, with its loans rising to $5.17 billion, up by 20.30% from the previous year\u2019s $4,293.63 million. \u00a0 \r\n \t This increase underscores the strengthening financial relationship between China and its partner nations, with a focus on long-term investments in infrastructure and development. \u00a0 \r\n \t Chinese loans have been used for critical infrastructures, especially in the transportation sectors. For instance, the loans have been used to fund a number of railway projects in Nigeria. \u00a0 \r\n \t China is owed the highest with about about 86.7% of the total owed to countries.\u00a0 \u00a0 \r\n \r\n International Development Association $14.96 billion (+11.30% YoY) \u00a0 \r\n<div class=\"ai-viewport-1\" data-insertion-position=\"prepend\" data-selector=\".ai-insert-23-44147492\" data-insertion-no-dbg=\"\" data-code=\"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\" data-block=\"23\">\r\n \r\n \r\n \r\n \t The International Development Association (IDA) is a part of the World Bank Group. \u00a0 \r\n \t Classified under multilateral debt, it has increased its financial support to $14.96 billion, marking an 11.30% increase from $13.45 billion the previous year. \u00a0 \r\n \t The IDA\u2019s consistent lending growth indicates sustained support for poverty reduction strategies and economic development programs. \u00a0 \r\n \r\n International Fund For Agricultural Development $277.4 million (+9.80% YoY) \u00a0 \r\n \r\n \t The International Fund For Agricultural Development (IFAD), also a multilateral entity, has a lending increase to $277.4 million, a 9.80% rise from $252.74 million. \u00a0 \r\n \t This increment demonstrates the IFAD\u2019s ongoing commitment to agricultural development and rural poverty reduction, emphasizing the importance of the agricultural sector in driving economic progress and food security. \u00a0 \r\n \r\n What this means: \u00a0Nigeria\u2019s total public debt of about N97.34 trillion is about 42% of the country\u2019s gross domestic product (GDP), which according to international standards is well within limits but above Nigeria\u2019 self-imposed limit of 40%.\u00a0 \u00a0 \r\n \r\n \t More importantly, Nigeria is largely exposed to debts dominated in naira, with about 61% of the debts in local currency.\u00a0 \u00a0 \r\n \t This effectively means the Nigerian government has a moderate grasp and control over how it manages its domestic debts. It can, for example, be in an unlikely situation where it is unable to pay down local debts and when due, print more naira to meet this obligation.\u00a0 \u00a0 \r\n \t About 39% of the total value of debts are in foreign currency. Most of the debts are also medium to long-term Eurobonds and owed to diverse creditors. The DMO recently\u00a0 noted \u00a0that a significant portion (63.79%) of its external debt is derived from loans from multilateral and bilateral lenders. These loans are primarily concessional or semi-concessional, indicating efforts to manage the debt burden effectively.\u00a0 \u00a0 \r\n \t While this is a manageable figure, it is more than Nigeria\u2019s external reserves and is becoming expensive to service.\u00a0 \u00a0 \r\n \r\n Nigeria is not \u00a0 in any favorable position \u00a0to take on more foreign debts at the current rates considering the state of government revenues and the devaluation of naira. However, to meet its large budget deficits, it is likely to keep borrowing, especially by issuing more FGN securities.\u00a0 \u00a0 \r\n \r\n \r\n "

"Public Debt: Nigeria\u2019s largest creditors as of December 2023"

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