In 2019, Nigeria paid $588.33m in debt service between
January and May, while the payment for 2020 was $5.40bn.
The debt service payments continued to rise in subsequent
years, with $2.02bn paid in 2021, $2.34bn in 2022, and $3.43bn in 2023.
Between January and May 2024, the country has paid $2.18bn
in debt service, according to the CBN’s
data.
This is 270.9 per cent increase compared to the first five
months of 2019 which was $588.33m.
The $2.18bn, in May 2024 is nearing half of the $4.8bn
projected by Fitch Ratings 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 $400m to $5.2bn next year, raising concerns about
Nigeria’s debt sustainability.
According to the CBN International Payments Data, the FG
spent the highest on debt financing within the last five years in 2020 which
amounted to $5.40bn.
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 N1.8tn in commercial borrowing
and N1.1tn 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 $2.25bn from the World
Bank to support President Bola Tinubu’s economic reforms.
The two-fold packages include $1.5bn for the Nigeria Reforms
for Economic Stabilization to Enable Transformation Development Policy Financing Program and
$750m 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.