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Naira value of 36 states and FCT’s external debt increased by 23.76% in six months

The naira value of the total external debt of Nigeria’s 36 states and Federal Capital Territory (FCT) increased by 23.76% from N3.350 trillion to N4.146 trillion between June 2023 and December 2023.

According to the debt profile of the 36 states of the federation and FCT published by the Debt Management Office, total sub-national debt as of June 30, 2023, stood at $4.349 billion which translates to N3.350 trillion using the exchange rate of N770.38/$.

However, as of December 31, 2023, despite an increase of around $261 million in the total sub-national external debt- just 6%, the naira value of the total debt jumped by N796 billion to N4.146 trillion in December 2023.

Reason for increase

The spike in the naira value of sub-national’s external debt stems from the significant weakening of the naira during the six months period. While an FX rate of N770.38/$ was used in calculating the naira value of subnational external debt in June, that of December was N899.39/$- marking a difference of N129.01

In the six months between June 30 and December 31, 2023, the naira dipped in value by 17.92% closing for the year 2023 at N907.11/$ from N769.25/$ as of June 30, 2023.

When analysed using the current exchange rate of around N1250/$, the naira value of sub-national’s external debt would increase significantly from the figure presented by the DMO.

It is important to note that state governments are not the only casualty in the depreciation of the naira on public finances. NewsTimes recently reported an addition of N1737 trillion to the naira value of the federal government’s external debt over the depreciation of the naira.

Effects of increased naira value of debt on state’s

The effect of elevated naira value of government’s external debt manifests in the huge cost of debt servicing by these sub-nationals. Lagos and Kaduna states with $1.24 billion and $587.07 million external debt stock respectively are at disadvantage in this wise.

Recently, the Kaduna state Governor, Sen. Uba Sani lamented the cost of servicing the state’s humongous external debt stock. According to him, the huge debt inherited from his predecessor has resulted in significant deductions from the state’s monthly FAAC allocation thereby diverting resources meant for critical sectors towards debt service.


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