Nigeria’s debt servicing bill has risen by 109 percent to N896.56 billion, according to statistics received from the Debt Management Office.
As a result, Nigeria has spent N3.83 trillion on debt servicing payments in the last 15 months.
Between October and December 2021, Nigeria spent N310.5 billion on domestic debt servicing and $286.35 million (N118.9 billion) on external debt servicing, totaling N429.4 billion.
While debt servicing payments cost N2.93 trillion in 2021, they cost N896.56 billion in the first quarter of 2022.
Nigeria, on the other hand, paid N668.69 billion on domestic debt servicing and $548.79 million (N227.87 billion) on overseas debt servicing between January and March 2022, totaling N896.56 billion.
The external debt servicing was done using the Central Bank of Nigeria’s official exchange rate, which was $1 = N415.22 as of June 15, 2022.
This means that the amount spent on debt servicing increased by 109 percent from December 2021 to March 2022, from N429 billion to N896 billion.
Nigeria’s debt situation deteriorated in the first quarter of this year, as the country’s debt stock increased by N2.04 trillion to N41.60 trillion, up from N39.56 trillion in December 2021.
Nigeria spent N612.71 billion on domestic debt servicing and $1 billion (N415.22 billion) on external debt servicing between January and March 2021, totaling N1.03 trillion.
Nigeria spent N808.49 billion on domestic debt servicing and $520.78 million (N216.24 billion) on external debt servicing from July to September 2021, totaling N1.02 trillion.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, raised concern about the fuel subsidy regime affecting Nigeria’s ability to ervice its debts at the inauguration of the World Bank’s Nigeria Development Update themed ‘The urgency for business unusual,’ held recently in Abuja.
She said, “Already we have borrowing increasing significantly and we are struggling with being able to service debt because even though revenue is increasing, the expenditure has been increasing at a much higher rate so it is a very difficult situation.”
If the government does not take necessary measures to boost revenue generation, debt servicing might consume 100% of the federal Government’s revenue by 2026, according to the International Monetary Fund.
Ari Aisen, the IMF’s Resident Representative for Nigeria, revealed this during a presentation in Abuja of the Sub-Saharan Africa Regional Economic Outlook report.
According to an IMF official, interest payments on debts may wipe out the country’s entire earnings in the next four years, based on a macro-fiscal stress test done on Nigeria.
Aisen said, “The biggest critical aspect for Nigeria is that we have done a macro-fiscal stress test, and what you observe is the interest payments as a share of revenue and as you see us in terms of the baseline from the federal government of Nigeria, the revenue almost 100 per cent is projected by 2026 to be taken by debt service.
“So, the fiscal space or the amount of revenues that will be needed and this without considering any shock is that most of the revenues of the federal government are now, in fact, 89 per cent and it will continue if nothing is done to be taken by debt service.”
