Nigeria’s External Debt Projected To Hit $45.1 Billion In 2024 As FG Approves $2.2 Billion Borrowing Plan

Nigeria’s external debt stock is projected to rise to $45.1bn by the end of 2024 as the Federal Government seeks additional funding to bolster the economy, according to the Debt Management Office (DMO).

The DMO revealed in its latest report that the country’s external debt increased by $780m in the second quarter of 2024, climbing from $42.12bn in March to $42.9bn in June.

In a new development, the Federal Executive Council (FEC) last Thursday approved a $2.2bn external borrowing plan to finance the Federal Government’s 2024 Appropriation Act.

The Minister of Finance, Wale Edun, announced the approval during a briefing with State House correspondents at the Aso Rock Villa in Abuja.

He disclosed that the borrowing plan included a mix of Eurobond and Sukuk offerings, valued at $1.7bn and $500m, respectively.

“These funds are expected to bolster Nigeria’s fiscal stability amid ongoing economic reforms,” Edun stated, adding that the allocation between the instruments would depend on market conditions and advice from transaction advisors.

He further noted that the borrowing plan is subject to approval by the National Assembly, emphasizing that the funds would play a key role in addressing fiscal challenges and supporting critical infrastructure projects.

“The first (memo) was to complete the borrowing programme of the FG in terms of the external borrowing with the approval of the $2.2bn financing programme made up of access to the international capital market for some combination of the Euro bond offer and the Sukuk bond offer.

“A Euro bond of about $1.7bn and Sukuk financing of another $500m the actual makeup of the financing which will be done as soon as the National Assembly has considered and seen fate to hopefully approve of the borrowing plan and the external borrowing approval is given, it will be done this year, as soon as possible after approval.

“The actual combination of instruments that will be raised will depend on what the advisors, the transaction advisors, the commercial advisers, and what they say about market conditions at the time we decide and we want to enter the market,” Edun explained.

In its report, the DMO noted that Nigeria’s external debt experienced a notable increase in its naira valuation between March 31, 2024, and June 30, 2024, due to naira devaluation.

On March 31, 2024, the total external debt was valued at $42.12bn, equivalent to ₦56.02tn, using an exchange rate of ₦1,330.26/$1.

By June 30, 2024, the external debt rose marginally to $42.90bn but surged to ₦63.07tn in naira terms due to a higher exchange rate of ₦1,470.19/$1.

This represents a 12.59 per cent increase in the naira valuation of external debt within the period, largely driven by the naira’s depreciation.

While the dollar-denominated debt grew by just 1.87 per cent, the significant devaluation amplified the burden of external debt in local currency terms, further emphasising the exchange rate’s critical role in Nigeria’s debt sustainability.

Justifying the borrowing, Edun said the external financing initiative aligned with the administration’s broader economic recovery plan, which focused on stabilising macroeconomic conditions, adjusting market pricing for foreign exchange and petroleum products, and supporting local production.

He added that, earlier in the year, Nigeria’s successful domestic issuance of dollar bonds highlighted the growing resilience and sophistication of the country’s financial market, attracting both local and international investors who showcased confidence in the Federal Government’s economic reform agenda.