Sub-national governments in Nigeria faced increasing financial challenges in 2023, with the total debt stock of the 36 states rising by 38.1% from N7.25 trillion in 2022 to N10.01 trillion.
According to BudgIT’s 2024 State of States report released on Tuesday, this surge in debt was driven by a N606.12 billion increase in domestic debt, resulting in an average year-on-year growth rate of 11.4%, bringing the total domestic debt to N5.86 trillion as of December 31, 2023.
The report also highlights a rise in foreign debt, which increased by 4.1% from $4.43 billion in 2022 to $4.61 billion in 2023. The liberalisation of the exchange rate has compounded the financial strain on states, significantly elevating their foreign loan repayment obligations when converted to naira.
Lagos State remains the most indebted in foreign currency, accounting for 26.9% of the total foreign debt, equivalent to $1.24 billion. This growing reliance on borrowing raises concerns about the sustainability of states’ finances and their ability to meet future obligations.
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