The Federal Government is said to have spent a total of $15.55 billion on debt servicing between 2019 and 2024.
The Central Bank of Nigeria (CBN) International Payments Data just released by the apex bank said in 2019, Nigeria paid $588.33 million in debt service between January and May, while the payment for 2020 was $5.40 billion.
It said the debt service payments continued to rise in subsequent years, with $2.02 billion paid in 2021, $2.34 billion in 2022, and $3.43 billion in 2023.
According to the data, between January and May 2024, the country has paid $2.18 billion in debt service. This is 270.9 per cent increase compared to the first five months of 2019 which was $588.33 million.
The $2.18 billion, in May 2024 is nearing half of the $4.8 billion projected by Fitch Ratings for the year.
This increase is despite the government’s assertions that it is shifting its focus towards domestic borrowing.
Fitch Ratings also predicts that the country’s external debt servicing will escalate by $400 million to $5.2 billion in 2025, raising concerns about Nigeria’s debt sustainability.
According to the CBN data, the federal government spent the highest on debt financing within the last five years in 2020 which amounted to $5.40 billion.
This breakdown comprises $1.9 billion in market debt payments and $1.6 billion in non-market debt payments. Furthermore, the Federal Government plans to take on additional external debt, including N1.8 trillion in commercial borrowing and N1.1 trillion in concessional loans, as outlined in the 2024 budget.
FBNQuest Research expects a further increase in external debt service payments, mirroring Fitch Ratings’ predictions, due to the government’s plans to access commercial debt markets and anticipated 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.
The two-fold packages include $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.
The Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, said, “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.”
This loan, described as “virtually a grant” by Edun, is expected to support the government’s economic reforms and development initiatives.
The report noted that the principal programme development objective is to raise non-oil revenues and safeguard oil and gas revenues.