According to the latest data from the Central Bank of Nigeria (CBN), the Federal Government has expended $15.55 billion on debt servicing between 2019 and 2024.
In 2019, Nigeria’s debt service payments amounted to $588.33 million between January and May. This figure soared to $5.40 billion in 2020, marking the highest annual debt servicing cost within the five-year period. The subsequent years saw payments of $2.02 billion in 2021, $2.34 billion in 2022, and $3.43 billion in 2023.
Between January and May 2024 alone, the country has paid $2.18 billion in debt service, a 270.9 percent increase compared to the same period in 2019. This payment is nearing half of the $4.8 billion projected for the year by Fitch Ratings.
Despite government claims of shifting focus towards domestic borrowing, Fitch Ratings predicts Nigeria’s external debt servicing will escalate by $400 million to $5.2 billion next year, raising concerns about the sustainability of the country’s debt.
The CBN’s International Payments Data highlights that 2020 witnessed the highest debt financing cost of $5.40 billion. Furthermore, FBNQuest Research notes a significant increase in Nigeria’s external debt service payments by $1.1 billion, reaching $3.5 billion in 2023. This includes $1.9 billion in market debt payments and $1.6 billion in non-market debt payments.
The Federal Government plans to incur additional external debt, including N1.8 trillion in commercial borrowing and N1.1 trillion in concessional loans as part of the 2024 budget. FBNQuest Research and Fitch Ratings expect a further rise in external debt service payments due to these anticipated borrowings.
To support President Bola Tinubu’s economic reforms, the World Bank has recently provided $2.25 billion. This package includes $1.5 billion for the Nigeria Reforms for Economic Stabilization to Enable Transformation Development Policy Financing Program and $750 million for the Nigeria Accelerating Resource Mobilization Reforms Program-for-Results.
Finance Minister and Coordinating Minister of the Economy, Mr. Wale Edun, stated the government’s commitment to restoring macroeconomic stability and promoting sustainable and inclusive economic growth through these reforms.
