- Nigeria’s debt servicing increased to $3.53 billion in the first nine months of 2024
- The amount represents a 38 per cent year-on-year increase compared to the $2.56 billion recorded in the same period in 2023
- The increase in debt servicing raises concerns about Nigeria's fiscal sustainability amid inflationary pressures, dwindling revenue, and naira devaluation
The cost of servicing Nigeria’s external debt increased from $2.56 billion in 2023 to $3.53 billion in the first nine months of 2024.
According to the International Payment Data of the Central Bank of Nigeria (CBN), the amount represents a year-on-year increase of $970 million or 38 per cent.
The increase highlights Nigeria’s revenue challenges and fiscal pressures facing the economy amid inflationary pressures and naira devaluation.
Year-on-year analysis of debt servicing
A year-on-year analysis shows increases in the cost of servicing Nigeria’s external debt in the first nine months of 2024.
In January 2024, the country spent $560.52 million on external debt servicing, a significant increase from the $112.35 million recorded in January 2023. The amount spent on debt servicing in February 2024 was $283.22 million, slightly less than the $288.54 million recorded in the same month in 2023.
The amount declined in March 2024 to $276.17 million spent, representing a 31 per cent drop compared to $400.47 million recorded in March 2023. In April 2024, debt servicing rose by 132 per cent to $215.20 million compared to $92.85 million recorded in April 2023.
The highest monthly expenditure in the cost of servicing debt was recorded in May 2024 as the amount rose to $854.37 million, representing a 287 per cent increase from $221.05 million recorded in May 2023.
The amount was slightly lower in June 2024, with $50.82 million spent on debt servicing compared to the $54.36 million spent in June 2023.
In July 2024, the debt servicing dropped by 15 per cent from $641.69 million in July 2023 to $542.50 million. The trend was sustained in August 2024 as $279.95 million was spent in debt servicing, a 10 per cent drop compared to $309.96 million in the previous year.
In September 2024, debt servicing increased by 17 per cent from $439.06 million in September 2023 to $515.81 million.
Rising debt servicing raises concerns about fiscal sustainability
The increase recorded in the amount Nigeria spends on debt servicing raises concern about the country's fiscal sustainability in the face of dwindling revenue.
Already, the Federal Government plans to spend N15.81 trillion on servicing debts as contained in the 2025 budget proposal.
With a revenue target of N34.82 trillion in 2025, the country faces N13.08 trillion deficits to make up for the projected government expenditure of N47.90 trillion in the budget.
Much of the money to bridge the revenue shortfall will come from external borrowings, further exacerbating the strain of debt servicing.
FG plans to borrow N31 trillion as national debt stock climbs to N165 trillion
Meanwhile, TheRadar earlier reported that the Federal Government would borrow an additional N31.24 trillion to fund expenditures within the next three years.
The new borrowing will increase Nigeria’s debt stock from N134.3 trillion as of June 2024 to N165.54 trillion by 2027.
