A report from the Debt Management Office (DMO) has revealed that the devaluation of the naira caused Nigeria’s external debt to surge by approximately N30.03 trillion between 2023 and June 2024. This significant rise was observed when measured in naira terms.
Although the external debt in U.S. dollars appeared smaller, the depreciation of the naira was identified as the main factor behind the sharp increase in local currency terms. According to data from the DMO, as of June 1, 2023, Nigeria’s external debt stood at $43.16 billion, Chronicles Reporters noted.
Out of this amount, $1.61 billion, representing 3.75% of the total external debt, was owed to the International Monetary Fund (IMF). Meanwhile, the World Bank’s share of Nigeria’s debt was $16.32 billion, with the majority of this owed to the International Development Association. This figure accounted for 38% of the country’s total external debt.
At the exchange rate of N770.38 to the dollar in June 2023, this debt translated to N33.25 trillion. However, by June 1, 2024, the naira had depreciated significantly by 47.6%, with the exchange rate climbing to N1,470.19 per dollar. Consequently, Nigeria’s external debt, which had slightly reduced to $42.90 billion, now amounted to N63.07 trillion in naira terms.
In dollar terms, Nigeria’s external debt decreased by 0.60% or $258.18 million between June 2023 and June 2024. Despite this reduction, the country’s debt in naira terms saw a dramatic 89.7% increase, rising by N29.82 trillion during the same period.
The report further highlighted that if the exchange rate of N770.38 per dollar from June 2023 had remained unchanged, Nigeria’s external debt would have been N33.05 trillion by June 2024. This indicates that the naira’s devaluation added N30.02 trillion to the nation’s external debt in just one year, exacerbating the challenges posed by a weakening currency and escalating total debt.
Although the face value of Nigeria’s external debt in dollars remained relatively stable, the depreciation of the naira significantly increased the equivalent amount in local currency. By June 2024, external debt accounted for 46.96% of Nigeria’s total debt, a rise from the 38.05% recorded in the same month of the previous year.
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