Nigeria's total debt stock has increased by 75.27 percent in the Second Quarter of 2023 to N87.38 trillion, from the N49.85 trillion recorded in Q1 2023. This was disclosed by the Debt Management Office (DMO) in its latest report on Thursday. According to the debt office, the surge was occasioned by the N22.71 trillion ways and means advances obtained by the federal government from the Central Bank of Nigeria (CBN). This total debt represents a N37.53 trillion increase in total public debt, compared to the N49.85 trillion reported at the end of the first quarter (Q1) of the year.
"Nigeria's total debt stock as of June 30, 2023, was N87.38tn ($113.42bn). It comprises the total domestic and external debts of the Federal Government of Nigeria, the thirty-six states, and the Federal Capital Territory.
“The major addition to the Public Debt Stock was the inclusion of the N22.712tn securitized FGN’s Ways and Means Advances.”
The DMO said the federal government received approval of the national assembly to securitise the CBN loan in May 2023.
CBN’s Ways and Means advances is a loan extended to the federal government for short-term financial emergencies.
The CBN Act stipulated that the loan issued shall not exceed five percent of the previous year’s revenue generated by the federal government.
However, it was increased to 15 percent in May after Muhammadu Buhari, the former president of Nigeria, requested securitisation of the loan to reduce the interest paid on the principal and extend its tenor.
The total public debt was at N49.85 trillion in Q1 2023 owing to the fact that the DMO did not include the Ways and Means loan, which is an accumulation of the federal government’s debt to the CBN.
The debt office noted that the securitisation of the central bank loan after receipt of requisite approvals, had enabled its inclusion in Nigeria’s total public debt profile.
“This development, which was welcomed by development partners amongst others, has improved debt transparency and led to the reduction in Debt Service costs associated with the Ways and Means Advances” the office said.
DMO said new borrowings by the federal government and the subnationals from local and external sources, also pushed up the total public debt. The increase surpassed the N77 trillion projected earlier in January by Patience Oniha, the director-general of DMO.
“The reforms already introduced by the present administration and those that may emerge from the recommendations of the Fiscal Reform and Tax Policies Committee, are expected to impact debt strategy and improve debt sustainability,” it added.