According to the international payment of the Central Bank of Nigeria, Nigeria spent $2.78 billion on servicing foreign debt in the first seven months of 2024. This amount accounts for 64% of the total $4.36 billion in official dollar payments made by the Apex Bank on behalf of the Nigerian government between January and July 2024.
Nigeria used up 46% of its total international payments on debt service in the same period last year. This represents a 39.13% increase in the percentage of payments directed towards foreign debt servicing in 2024.
The significant rise in the percentage of payments allocated to debt service suggests that Nigeria’s foreign debt obligations have grown substantially, surpassing the increase in overall international payments.
“The significant increase in debt servicing costs could be attributed to several points, including a larger debt stock, elevated interest rates on existing debt, or adjustments to payment schedules that have accelerated debt repayments.
Data interpretation
In January 2024, the external debt servicing payment rose from $112.35 million to $560.52 million, a 399% increase recorded in the same month of last year.
It further constituted 74% of the total international payments of $757.41 million made in the same month. This trend, although fluctuating, remained significant as the months progressed.
- February 2024 saw debt servicing costs amount to $283.22 million, accounting for 67% of the $424.96 million in total international payments for that month. Also, there was a marginal decrease in debt servicing payments by 2% from the $288.54 million paid in the same month of 2023.
- The following month, March 2024, witnessed a further decrease to $276.17 million, down by 31% from $400.47 million in the same month of last year, representing 65% of the total international payments of $424.71 million.
- April 2024 recorded $215.20 million in debt servicing payments, which made up 47% of the $462.54 million total international payments. This was one of the lowest percentages observed in the year. However, there was a significant increase of 132% from the $92.85 million paid in April 2023.
- The most evident rise occurred in May 2024, with debt servicing rising to $854.37 million, up by 287% from $221.05 million in the same month of last year, reflecting a considerable increase in debt stock.
- It is also the highest monthly expenditure within the period. This figure represents 69% of the $1.24 billion in total international payments made in that month.
- In June 2024, the debt servicing cost was $50.82 million, slightly lower by 6% compared to $54.36 million in June 2023.
- It constituted only 14% of the $353.61 million total international payments made that month. This was the lowest percentage of the year, signifying a temporary relief in debt obligations at the end of the first half of the year.
Any ease was shortened as debt service payments surged to $542.50 million in July 2024, consuming a significant 78% of the country’s total international payments. Nonetheless, this figure marked a 15% decline compared to the $641.70 million paid in July 2023.
For the seven-month period between January and July, Nigeria’s total debt service costs reached $2.78 billion in 2024, a 19% increase from the $1.81 billion spent during the same period in 2023.
This ongoing increase showcases the escalating burden of debt service on Nigeria’s finances and points attention to the growing difficulty of managing the country’s external debt in the face of rising global financial pressures.
Key points
- Reports earlier indicated that Nigeria’s foreign debt burden continued to grow, with the country spending approximately $1.12 billion on debt service payments in the first quarter of 2024.
- As of the seventh month, Nigeria’s foreign debt service payments had more than doubled from their first-quarter level.
- In a statement, the World Bank expressed alarm over the rising debt service costs plaguing developing nations worldwide. The bank’s Chief Economist and Senior Vice President, Indermit Gill, speaking on the height of the situation, warned that without swift and coordinated action, a global financial crisis could ensue.
- Gill cautioned that the confluence of record-high debt and escalating interest rates has placed many developing nations on a perilous path that could potentially result in economic hardship and difficult resource allocation choices.
This article was written by Tamaraebiju Jide, a student at Elizade University
