The Central Bank of Nigeria recently disclosed that the Federal Government spent a total of $15.55 billion on debt servicing from 2019 to 2024.
According to The PUNCH, this information was contained in the latest data released by the CBN.
The data revealed that in 2019, Nigeria spent $588.33 million on debt service between January and May, while the figure for 2020 surged to $5.40 billion.
Debt service payments continued to escalate over the subsequent years, with $2.02 billion paid in 2021, $2.34 billion in 2022, and $3.43 billion in 2023.
For the first five months of 2024, the country has already paid $2.18 billion in debt service, marking a significant 270.9% increase from the $588.33 million paid during the same period in 2019.
The $2.18 billion paid by May 2024 is nearing half of the $4.8 billion projected by Fitch Ratings for the entire year.
The report noted that this surge occurs despite the government’s claims of shifting focus towards domestic borrowing.
Fitch Ratings further predicts that Nigeria’s external debt servicing will rise by $400 million to $5.2 billion next year, raising concerns about the country’s debt sustainability.
According to CBN’s International Payments Data, the Federal Government’s highest debt financing expenditure in the last five years occurred in 2020, amounting to $5.40 billion.
Nigeria’s external debt service payments saw a notable increase of $1.1 billion, reaching $3.5 billion in 2023, as reported by FBNQuest Research.
This amount includes $1.9 billion in market debt payments and $1.6 billion in non-market debt payments.
The Federal Government also plans to incur additional external debt, comprising N1.8 trillion in commercial borrowing and N1.1 trillion in concessional loans, as per the 2024 budget.
FBNQuest Research anticipates a further rise in external debt service payments, aligning with Fitch Ratings’ forecasts, due to the government’s intention to access commercial debt markets and the expected growth in borrowings from concessional sources.
Recently, the government received $2.25 billion from the World Bank to support President Bola Tinubu’s economic reforms.
This funding includes $1.5 billion for the Nigeria Reforms for Economic Stabilization to Enable Transformation Development Policy Financing Program and $750 million for the Nigeria Accelerating Resource Mobilization Reforms Program-for-Results.
Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, commented, “We have undertaken bold and necessary reforms to restore macroeconomic stability and put Nigeria on a path to sustainable and inclusive economic growth. These reforms will create quality jobs and economic opportunities for all Nigerians.”
Edun described the loan as “virtually a grant,” which is expected to support the government’s economic reforms and development initiatives.
The principal programme development objective is to enhance non-oil revenues and safeguard oil and gas revenues.
