In a significant development for its economy, Nigeria's total public debt reached N142.3 trillion by September 30, 2024, marking a 5.97 percent increase from June's N134.3 trillion. This rise, equivalent to N8.02 trillion, primarily reflects the impact of currency depreciation on the country's external obligations.

Exchange Rate Impact on External Debt

While external debt showed only a marginal increase in dollar terms - from $42.90 billion to $43.03 billion - the naira equivalent surged by 9.22 percent to N68.89 trillion. This dramatic rise in local currency terms stems from the naira's depreciation, with the exchange rate weakening from N1,470.19 to N1,601.03 against the dollar during the quarter.

Domestic Debt Composition

The domestic debt portfolio, while decreasing in dollar terms from $48.45 billion to $45.87 billion, grew by 3.10 percent in naira terms to N73.43 trillion. Federal Government bonds dominate this category, comprising 78.95 percent of domestic debt at N54.65 trillion. Notably, Nigeria successfully launched its first domestic dollar-denominated bond, raising $500 million with an impressive 180 percent subscription rate, adding N1.47 trillion to the domestic debt stock.

Debt Distribution

The Federal Government holds the majority of both external and domestic debt. Its external obligations reached $38.12 billion, while states and the Federal Capital Territory accounted for $4.91 billion. In domestic terms, the Federal Government's share stood at N69.22 trillion, with states and FCT holding N4.21 trillion.

Debt Instruments Analysis

The domestic debt portfolio shows diverse instruments:

- Treasury Bills declined slightly to N11.73 trillion

- Promissory notes increased by 5.80 percent to N1.77 trillion

- FGN Sukuk decreased to N992.56 billion

- Savings Bonds grew by 16.11 percent to N64.09 billion

- Green Bonds remained stable at N15 billion

Sustainability Concerns

Despite the overall decrease in dollar-denominated debt from $91.35 billion to $88.89 billion, the rising naira-equivalent debt burden has sparked concerns among economic analysts. The situation is particularly worrying given that interest payments consume a significant portion of government revenue, raising questions about long-term debt sustainability in the face of continued currency volatility.​​​​​​​​​​​​​​​​