The Federal Government paid $112.35 million in January 2023 to service its foreign debt, a 146.17 percent increase over the $45.64 million spent in December 2022, according to data from the Central Bank of Nigeria’s Weekly International Payments.
This happened when the Federal Government worked to increase its income base despite obstacles. In January 2023, the Federation Account Allocation Committee distributed N750.17 billion to the three levels of government.
The amount is down N240.02 billion from the N990.19 billion given in December 2022. Nigeria paid $2.4 billion in 2022 to service its external debt, a little increase over the $2.11 billion spent in 2021. The federal government took about N78 billion out of the state budget for paying external debt.
This was based on information from the National Bureau of Statistics’s publication of the Federation Account Allocation Committee Disbursement Reports. From the Federation Account allocations allocated to state governments in 2022, the deductions were made.
The legislative structure that governs the federation account now permits money to be distributed among three key categories: statutory allocation, Value Added Tax distribution, and derivation principle.
Lagos was the hardest-hit state by the deductions, with nearly N23.61 billion taken out in 2022 to pay off external debt. Following it were Kaduna, which had N10.25 billion removed, and Cross River, which had N7.56 billion deducted. The Federal Government, according to the International Monetary Fund, is projected to spend 82 per cent of its revenue on interest payments in 2023.
According to the IMF, external debt (including that of the private sector) will rise to $121.6bn, with external reserves climbing to $37.5bn. It disclosed this in a table of projections in its ‘IMF Executive Board Concludes 2022 Article IV Consultation with Nigeria Summary
The projections showed an improvement in the share of the government’s revenue used as interest payment, with interest payment falling from 96.3 per cent in 2022 to 82 per cent in 2023. It added that interest payment was 86.1 per cent and 87.8 per cent of the Federal Government’s revenue in 2020 and 2021, respectively.
