The Central Bank of Nigeria’s most recent statistics shows that between 2019 and 2024, the Federal Government paid a total of $15.55 billion on debt servicing. Nigeria made debt service payments totaling $588.33 million in 2019 and $5.40 billion in 2020. The payments were made between January and May.
In the years that followed, the debt service payments increased even more: $2.02 billion, $2.34 billion, and $3.43 billion were paid in 2021, 2022, and 2023. Based on data from the CBN, the nation has paid $2.18 billion toward debt payment between January and May of 2024.
Compared to the first five months of 2019, which brought in $588.33 million, this is a 270.9% gain. May 2024 GDP of $2.18 billion is almost half of the $4.8 billion Fitch Ratings has forecast 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 next year, raising concerns about Nigeria’s debt sustainability.
According to the CBN International Payments Data, the FG spent the most on debt financing within the last five years in 2020, which amounted to $5.40 billion. Nigeria’s external debt service payments saw a significant increase of $1.1bn, reaching $3.5bn in 2023, according to FBNQuest Research.
This breakdown comprises $1.9bn in market debt payments and $1.6bn 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 and 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.
