Analysis by Region - Emerging Markets - Nigeria

Analysis by Region - Emerging Markets - Nigeria

Nigeria's rising debt burden is a notable risk to its economic growth outlook. Public debt ballooned in the second quarter of this year, surging from 24.0% of GDP in Q1 to 41.2% of GDP in Q2. Domestic debt rose by roughly 80% q/q in Q2 due to the conversion of short-term loans from the Central Bank of Nigeria (CBN) to government bonds, while the naira-denominated value of external debt increased by nearly 70% q/q owing to the currency devaluation in June. While Nigeria has exceeded the public debt statutory threshold of 40% of GDP, we believe that parliament will lift this self-imposed debt limit to support President Bola Tinubu's reform agenda.