The latest quarterly statistical bulletin from the Central Bank of Nigeria (CBN), shows that in Q1 2024, the federal government had a retained revenue of N1.76 trillion. However, in the same period, debt servicing gulped N1.31 trillion, which is about 74 per cent of the government revenue.
This figure highlights the continuing financial strain on the government’s resources as it grapples with significant debt obligations.
It was further observed that Nigeria spent about 70 per cent of its dollar payments to service external debts between January and March 2024.
According to data from the CBN, out of the $1.61 billion in total outflows made during this period, a substantial amount of $1.12 billion was directed towards servicing external debt.
This figure represents a hefty chunk of the nation’s financial resources and indicates a significant increase from the previous year when it was 49 per cent in Q1 2023.
The report also shows that the federal government spent more on debt servicing than it spent on personnel costs or capital expenditures.
Personnel costs for Q1 2024 amounted to N1.15 trillion, an increase of 17.1 per cent from the N978.11 billion spent in the same period last year.
However, capital expenditure fell by 35.9 per cent to N1.15 trillion in Q1 2024, from the N1.8 trillion recorded in the same quarter of 2023.
The Debt Management Office (DMO) recently announced that the nation’s total public debt increased significantly to N121.67 trillion (approximately $91.46 billion) as of March 31, 2024.
According to a statement from the DMO, this figure encompasses the combined domestic and external debts of the Federal Government of Nigeria (FGN), the 36 state governments, and the Federal Capital Territory (FCT).
In comparison, the total public debt as of December 31, 2023, stood at N97.34 trillion. This represents a substantial increase of N24.33 trillion or 24.99 per cent within a three-month period.
However, the increase is driven majorly by naira devaluation, as the total debt was reduced in dollar terms by $16.77 billion or 18.34 per cent.
The World Bank in a recent statement expressed deep concern over the escalating debt service costs that are burdening developing countries worldwide. World Bank’s Chief Economist, and Senior Vice President, Indermit Gill, emphasized the gravity of the situation, highlighting the potential for a widespread financial crisis if immediate and coordinated actions are not taken.
According to Gill, the combination of record-level debt and soaring interest rates has set many developing nations on a precarious path, one that could lead to economic distress and tough decisions regarding the allocation of resources.