The sharp depreciation of the naira has significantly impacted Nigeria’s external debt, with a staggering increase of ₦30.03 trillion in naira terms between 2023 and June 2024, despite a slight decrease in dollar value.

Key Data Points

  • External Debt Decline in Dollar Terms: Reduced by 0.6% from $43.16 billion in June 2023 to $42.90 billion in June 2024.
  • Naira Value Surge: The naira equivalent of external debt jumped 89% from ₦33.25 trillion to ₦63.07 trillion.
  • Exchange Rate: Naira depreciated by over 47%, moving from ₦770.30/$1 in 2023 to ₦1,470.19/$1 in 2024.

Debt Composition

  • Multilateral Lenders:
    • World Bank Group: $16.32 billion (38% of external debt).
    • IMF: $1.61 billion (3.75%).
    • AfDB: $3.87 billion (9.03%).
  • Bilateral Lenders:
    • China: $5.07 billion (largest bilateral lender).
    • France: $623.55 million.
  • Commercial Creditors:
    • Eurobonds: $15.12 billion (35.24% of foreign debt).

Broader Economic Challenges

  • The depreciation of the naira has amplified Nigeria’s debt burden in local terms, highlighting vulnerabilities in currency stability and debt management.
  • The reliance on multilateral and commercial creditors underscores the need for diversified and resilient fiscal strategies.

A Call to Action

President Bola Tinubu has pledged economic reforms to address the debt crisis, with a focus on curbing corruption and implementing innovative strategies to stabilize Nigeria’s economy.

Caption: “Naira’s fall deepens Nigeria’s debt woes—₦30 trillion added to external debt burden in one year.”

Source: Punch