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The most recent data from the Central Bank of Nigeria has shown that the Federal Government allocated $15.55bn to debt servicing between 2019 and 2024.
In 2019, Nigeria paid $588.33m in debt service from January to May, while the payment for 2020 was $5.40bn.
Subsequently, the debt service payments increased to $2.02bn in 2021, $2.34bn in 2022, and $3.43bn in 2023.
From January to May 2024, the country has already paid $2.18bn in debt service.
This represents a 270.9% increase compared to the first five months of 2019, when the amount was $588.33m.
The $2.18bn paid in May 2024 is approaching half the $4.8bn projected by Fitch Ratings for the entire year. This rise in debt service payments is occurring despite the government's intention to focus more on domestic borrowing.
Fitch Ratings also predicts that the country’s external debt servicing will escalate by $400m to $5.2bn next year, raising concerns about Nigeria’s debt sustainability.
According to the CBN International Payments Data, the FG spent the highest on debt financing within the last five years in 2020 which amounted to $5.40bn.
In 2023, Nigeria experienced a significant rise in its external debt service payments, reaching $3.5bn, with $1.9bn attributed to market debt payments and $1.6bn to non-market debt payments.
The Federal Government is planning to acquire more external debt, including N1.8tn in commercial borrowing and N1.1tn in concessional loans as outlined in the 2024 budget.
FBNQuest Research anticipates a further increase in external debt service payments, in line with Fitch Ratings' projections, due to the government's intentions to access commercial debt markets and expected growth in borrowings from concessional sources.
Recently, the government received $2.25bn from the World Bank to support President Bola Tinubu’s economic reforms, with $1.5bn allocated for the Nigeria Reforms for Economic Stabilization to Enable Transformation Development Policy Financing Program and $750m for the Nigeria Accelerating Resource Mobilization Reforms Program-for-Results.
The Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, stated that the government has implemented necessary reforms to restore macroeconomic stability and promote sustainable and inclusive economic growth, aiming to create job opportunities for all Nigerians.
Described as "virtually a grant" by Edun, the loan is expected to aid the government's economic reforms and development initiatives, with a focus on increasing non-oil revenues and safeguarding oil and gas revenues.
