LAGOS, Nigeria (VOICE OF NAIJA)-According to the latest data from the Central Bank of Nigeria (CBN) the Federal Government has allocated $15.55 billion to debt servicing from 2019 to 2024.
In the first five months of 2019, Nigeria’s debt servicing costs amounted to $588.33 million This figure surged to $5.40 billion in 2020.
The upward trend persisted, with the country spending $2.02 billion in 2021, $2.34 billion in 2022, and $3.43 billion in 2023.
From January to May 2024, Nigeria has spent $2.18 billion on debt servicing, as reported by the CBN.
This represents a 270.9 percent increase compared to the $588.33 million paid during the same period in 2019.
The $2.18 billion spent by May 2024 is close to half of the $4.8 billion that Fitch Ratings projected for the entire year.
This rise comes despite the government’s claims of prioritizing domestic borrowing.
Fitch Ratings forecasts that Nigeria’s external debt servicing will increase by $400 million to reach $5.2 billion next year, heightening concerns about the country’s debt sustainability.
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The CBN International Payments Data reveals that the Federal Government’s highest debt financing expenditure over the past five years occurred in 2020, totaling $5.40 billion.
According to FBNQuest Research, Nigeria’s external debt service payments rose significantly by $1.1 billion, reaching $3.5 billion in 2023.
This amount includes $1.9 billion in market debt payments and $1.6 billion in non-market debt payments.
Additionally, the Federal Government plans to incur further external debt, with N1.8 trillion in commercial borrowing and N1.1 trillion in concessional loans outlined in the 2024 budget.
FBNQuest Research anticipates that external debt service payments will continue to rise, aligning with forecasts from Fitch Ratings.
This projection is influenced by the government’s strategy to tap into commercial debt markets and expand borrowings from concessional sources.
In a recent development, the government secured $2.25 billion from the World Bank to bolster President Bola Tinubu’s economic reforms.
The funding comprises $1.5 billion allocated to the Nigeria Reforms for Economic Stabilization to Enable Transformation Development Policy Financing Program, along with an additional $750 million designated 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.”
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This loan, described as “virtually a grant” by Edun, the loan is anticipated to bolster the government’s economic reforms and development initiatives.
The principal objective of the program is to increase non-oil revenues and safeguard oil and gas revenues, as highlighted in the report.