Stock of external debt flat in Q2

The FGN’s external debt obligations at end-June amounted to US$22.08bn, equivalent to 5.9% of 2017 GDP. This includes the external borrowings of the state governments, which are necessarily guaranteed by the FGN. The debt stock was flat on the previous quarter because, unlike in Q1 when it raised US$2.5bn, the FGN did not tap the Eurobond market. A small decline in obligations to the World Bank Group was balanced by a rise in debt due to bilateral creditors, notably the Exim Bank of China and Germany’s KFW (state-owned development bank).


  • ICM are again the largest creditor group, and are likely to remain so due to the FGN/DMO policy of externalization of debt. From a financing perspective, it is worth noting that 60.1% of the debt stock is due to multilateral and bilateral creditors on concessional terms.


  • In line with externalization, the N1.95trn deficit in the FGN’s 2018 budget is to be covered by external and domestic borrowings of N850bn (US$2.8bn) and N790bn respectively as well as unspecified privatization proceeds of N310bn.


  • There has been a surge in warnings about the sustainability of Nigeria’s public debt stock, some of them influenced by regret that commercial borrowings come without policy conditionality. At current levels, the FGN can comfortably service external debt of US$22bn from the earnings accruing from oil production of +/-2.0 mbpd.
FGN external debt by lender group, June 2018 (% shares) Total: US$22.08bn

Sources: Debt Management Office (DMO); FBNQuest Capital Research
  • ·There is a more useful conversation to be had about the pace at which the FGN’s borrowings are funding an overhaul of the infrastructure and transformation of the economy from a rent-seeking to a producing model.


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