The Federal Government of Nigeria has spent $15.55 billion on debt servicing between 2019 and 2024, according to the Central Bank of Nigeria (CBN). This amount highlights the country’s increasing debt burden over the past five years.
In 2019, Nigeria spent $588.33 million on debt servicing between January and May. The amount surged dramatically to $5.40 billion in 2020. The trend continued with $2.02 billion in 2021, $2.34 billion in 2022, and $3.43 billion in 2023. From January to May 2024 alone, the country has already spent $2.18 billion on debt servicing, representing a 270.9% increase compared to the same period in 2019.
The $2.18 billion spent in the first five months of 2024 is nearly half of the $4.8 billion that Fitch Ratings projected for the entire year. This increase comes despite the government’s claims of shifting its focus towards domestic borrowing. Fitch Ratings also predicts that Nigeria’s external debt servicing will rise 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 reveals that 2020 saw the highest debt servicing costs in the past five years, totaling $5.40 billion. In 2023, Nigeria’s external debt service payments reached $3.5 billion, a significant increase of $1.1 billion from previous years. This amount included $1.9 billion in market debt payments and $1.6 billion in non-market debt payments.
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Despite these rising costs, 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. This is expected to further increase external debt service payments, in line with Fitch Ratings’ predictions.
Recently, the Nigerian government secured $2.25 billion from the World Bank to support economic reforms initiated by President Bola Tinubu. This financial support 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.
Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, emphasized the significance of these reforms.
He stated, “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.”
Edun described the loan from the World Bank as “virtually a grant,” which is expected to support the government’s economic and development initiatives.
The CBN report noted that the primary objective of these programs is to increase non-oil revenues and safeguard oil and gas revenues, aiming to stabilize Nigeria’s economy in the long run. As Nigeria continues to grapple with its debt servicing obligations, these reforms and financial support from international bodies like the World Bank will be crucial in steering the country towards economic stability and growth.