Understanding the Nigerian Domestic Debt

Abstract

The portion of a country's overall public debt that is owed to domestic lenders is known as its internal or domestic debt. The public debt profile of a nation is comprised of its external and domestic debt stock. This article provides insights into the various components and major holders of the country's domestic debt. The Country’s domestic debt profile, which is currently on the rise, has led to numerous challenges in the economy such as debt overhang, higher debt servicing costs, unstable currency rates, and crowding out impacts on the private sector, among others. Therefore, measures have been recommended to curtail the level of increasing borrowings. The goal of setting up a distinct public debt management agency such as the Debt Management Office (DMO) by the government was to continuously accomplish the benefits of cautiously sourcing financing to cover for government deficits at reasonable rates and with manageable medium to long-term risks.