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Nigeria’s debt stock surges to N142trn on weak naira

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Nigeria’s public debt profile has yet again increased by N8.02 trillion to N142 trillion as of the end of September 30, 2024 driven by the depreciation of the naira that has continued to affect the country’s cost of external obligation.

According to data published by the Debt Management Office (DMO) on Tuesday, the spike represented a 5.97 percent increase from N134.3 trillion recorded in the second quarter of 2024.

The debt, comprising external and domestic obligations, reflects the significant impact of exchange rate depreciation on external borrowings when converted to naira terms.

With the exchange rate weakening from N1,470.19/$ in June to N1,601.03/$ by the end of September, Africa’s fourth largest economy has as much as N68.88 trillion ($43 billion) as its foreign debt, accounting for 48.4 percent of the total debt stock.

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In naira terms, external debt surged by 9.22 percent, rising from N63.07 trillion to N68.89 trillion within the quarter.

A more cursory look at the data showed that the Nigerian government relied more on domestic borrowings as it accounted for 51.6 percent of total debt profile, with the FGN taking N69.2 trillion and state governments having N4.2 trillion as their debt.

Domestic debt reduced by 5.34 percent in dollar terms, falling from $48.45 billion in June to $45.87 billlion in September. In naira terms, it rose by 3.10 percent from N71.22 trillion to N73.43 trillion during the period.

The Federal Government’s external debt accounted for $38.12 billion in September, up from $38.01 billlion in June, while states and the Federal Capital Territory held $4.91 billlion in external debt, a slight increase from $4.89 billion.

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For domestic debt, the Federal Government’s obligations rose from N66.96 trillion to N69.22 trillion, while states and the FCT recorded a minor reduction from N4.27 trillion to N4.21 trillion.

Overall, Nigeria’s total public debt in dollar terms fell by 2.70 percent, from $91.35 billion in June to $88.89 billlion in September.

However, Nigeria’s debt stock has grown from 78.13 percent recorded in June 2024 to 78.95 percent in September 2024, defying the DMO’s self-imposed public debt ceiling of 40 percent, as outlined in the agency’s Medium-Term Debt Management Strategy.

Although the current public debt-to-GDP ratio of about 55 percent is slightly below the IMF’s 60 percent benchmark for emerging market countries, the nation’s weak revenue profile and FX volatility risks could further escalate debt levels, straining the already strained economy.

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Rising public debt means elevated debt-to-service cost. The rising debt profile, particularly in naira terms, raises concerns over debt sustainability, especially with the exchange rate volatility driving up the local currency cost of external obligations.

Analysts have expressed concerns over the rising debt levels, warning that it could trigger a debt crisis for a country that’s reeling from its worst cost of living crisis in a generation.

While the exchange rate has begun to show reduced volatility due to the various central bank’s policies, analysts believe that the proposed tax reforms, if passed, might help Nigeria boost its revenue base and lower borrowings.

Credit: Businessday NG.

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Economy

SEE Black Market Dollar To Naira Exchange Rate in Lagos and FCT today, 7th February 2025

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The official naira black market exchange rate in Lagos and FCT, Abuja today including the Black Market rates, Bureau De Change (BDC), and CBN rates.

According to Bureau De Change (BDC) sources in the Ogba and Ikeja axis of Lagos state, the exchange rate for a dollar to naira at the Parallel Market (Black Market) is N1700 on Friday, February 7th, 2024, players bought a dollar for N1685 and sold it for N1700.

Bureau De Change (BDC) sources in Gwarimpa and Gwagwalada in FCT buy a dollar for N1685 and sell it for N1700 on Friday, February 7th, 2024.

Please note that the Central Bank of Nigeria (CBN) does not recognize the parallel market (black market), as it has directed individuals who want to engage in Forex to approach their respective banks.

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Dollar to Naira Black Market Rate Lagos
Dollar to Naira (USD to NGN) Black Market Exchange Rate Today
Buying Rate N1685
Selling Rate N1700
Dollar to Naira Black Market Rate FCT, Abuja
Dollar to Naira (USD to NGN) CBN Rate Today
Buying Rate N1685
Selling Rate N1700
Please note that the rates you buy or sell forex may differ from what is captured in this article because prices vary from state to state across Nigeria.

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Economy

CBN lists conditions for sale of FX to BDC operators

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The Central Bank of Nigeria, CBN, has issued guidelines for the sale of foreign exchange (FX) to Bureaux De Change, BDC, operators.

The modalities are outlined in a statement issued by the Trade and Exchange Department of the CBN on Wednesday.

The Apex Bank stated that this is in response to its earlier authorization granting temporary access to existing BDCs to the Nigerian Foreign Exchange Market (NFEM) for the purchase of FX from authorized dealers.

The CBN noted that authorized dealers are only allowed to sell foreign exchange cash to BDCs, subject to a maximum of USD 25,000.00 per week per BDC.

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The Apex Bank warned that any breach of this condition will attract appropriate sanctions.

The CBN emphasized that the selling rate by authorized dealers to BDCs shall be the prevailing day rate at the NFEM window.

According to the statement from the bank, “foreign exchange cash purchased by BDCs from authorized dealer banks shall be sold to foreign exchange end-users at a rate not exceeding a one percent margin above the buying rate.

“While the one percent margin stated above shall be applicable to all funds to be retailed by BDCs, regardless of the source of funds.”

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Bank of England cuts interest rate to 4.5%

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The Bank of England, on Thursday, reduced its key interest rate by a quarter point to 4.5 percent to help support weak British growth even if UK inflation stays elevated.

“We’ll be monitoring the UK economy and global developments very closely and taking a gradual and careful approach to reducing rates further,” governor Andrew Bailey said following the expected decision.

“It will be welcome news that we have been able to cut interest rates again today.

“We’ll be monitoring the UK economy and global developments very closely and taking a gradual and careful approach to reducing rates further.”

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The details of the rate cut is on the Bank’s website, titled, “Bank Rate reduced to 4.5% – February 2025.”

According to the Bank, “At its meeting ending on 5 February 2025, the Monetary Policy Committee, MPC, voted by a majority of 7–2 to reduce Bank Rate by 0.25 percentage points, to 4.5%.

“Two members preferred to reduce Bank Rate by 0.5 percentage points, to 4.25%.

“There has been substantial progress on disinflation over the past two years, as previous external shocks have receded, and as the restrictive stance of monetary policy has curbed second-round effects and stabilised longer-term inflation expectations.

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“That progress has allowed the MPC to withdraw gradually some degree of policy restraint, while maintaining Bank Rate in restrictive territory so as to continue to squeeze out persistent inflationary pressures.

“CPI inflation was 2.5% in 2024 Q4. Domestic inflationary pressures are moderating, but they remain somewhat elevated, and some indicators have eased more slowly than expected.

“Higher global energy costs and regulated price changes are expected to push up headline CPI inflation to 3.7% in 2025 Q3, even as underlying domestic inflationary pressures are expected to wane further.

“While CPI inflation is expected to fall back to around the 2% target thereafter, the Committee will pay close attention to any consequent signs of more lasting inflationary pressures.”

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