President Bola Tinubu has requested the National Assembly’s approval for a new external borrowing plan of ₦1.767 trillion (approximately $2.209 billion) under the 2024 Appropriation Act.
If granted, the loan will be utilized to partially finance the ₦9.7 trillion deficit in the 2024 budget.
The president’s request was presented during a plenary session on Tuesday, where he also submitted the Medium-Term Expenditure Framework/Fiscal Strategy Paper (MTEF/FSP) for 2025–2027 and an amendment bill for the National Social Investment Programme. The proposed amendment seeks to make the social register the primary tool for implementing federal government welfare programs.
Meanwhile, the Central Bank of Nigeria (CBN) recently reported that the federal government spent $3.58 billion on foreign debt servicing in the first nine months of 2024, marking a 39.77% increase from the $2.56 billion spent during the same period in 2023.
The CBN’s international payment statistics reveal a rising trend in debt servicing costs, with the highest monthly expenditure in 2024 recorded in May at $854.37 million, compared to 2023’s peak of $641.70 million in July.
In January 2024, debt servicing surged by 398.89%, reaching $560.52 million from $112.35 million in January 2023. February saw a slight decline of 1.84%, with payments dropping to $283.22 million from $288.54 million in 2023.
March experienced a 31.04% decrease, with $276.17 million paid compared to $400.47 million in the same month last year.
Conversely, April recorded a sharp increase of 131.77%, with $215.20 million paid compared to $92.85 million in 2023.
These figures highlight Nigeria’s escalating debt obligations amid growing fiscal pressures.
In May 2024, Nigeria recorded its highest monthly debt servicing payment, amounting to $854.37 million—an increase of 286.52% compared to $221.05 million in May 2023.
Conversely, June 2024 saw a 6.51% decline, with $50.82 million paid, down from $54.36 million in the same month the previous year.
Debt servicing costs in July 2024 dropped by 15.48%, with payments totaling $542.50 million, compared to $641.70 million in July 2023. August followed a similar trend, declining by 9.69%, as $279.95 million was paid against $309.96 million in 2023.
However, September 2024 saw an uptick, with payments rising by 17.49% to $515.81 million, up from $439.06 million in September 2023.
These figures, compounded by rising exchange rates, underscore increasing concerns over the burden of Nigeria’s foreign debt obligations.
Additionally, the debt stock of Nigeria’s 36 states reached ₦11.47 trillion by June 30, 2024, according to a report by Channels Television.
This represents a 14.57% rise from the ₦10.01 trillion recorded in December 2023, despite Federal Accounts Allocation Committee (FAAC) disbursements and states’ internally generated revenues (IGR).
External debt for the states and the Federal Capital Territory (FCT) grew from $4.61 billion to $4.89 billion during the same period.
In naira terms, external debt increased sharply by 73.46%, rising from ₦4.15 trillion to ₦7.2 trillion due to the naira’s devaluation from ₦899.39/$1 in December 2023 to ₦1,470.19/$1 in June 2024.
Conversely, domestic debt for the states and the FCT declined from ₦5.86 trillion to ₦4.27 trillion. Collectively, the states and FCT accounted for ₦134.3 trillion of Nigeria’s public debt in June 2024.
Despite this, sub-national governments continued to rely heavily on borrowing to finance their budgets.
Channels Television earlier reported that state debt stocks had surged by 38.1%, from ₦7.25 trillion in 2022 to ₦10.01 trillion by December 2023.
According to BudgIT’s 2024 State of States report released on Tuesday, the debt growth was partly driven by a N606.12bn increase in domestic debt, resulting in an average year-on-year growth rate of 11.4%. By 31st December 2023.
The total domestic debt stood at N5.86tn.
The situation was further complicated by rising foreign debt, which increased by 4.1%, from $4.43bn in 2022 to $4.61bn in 2023.
According to the report, the liberalisation of the exchange rate exacerbated the financial strain on states, significantly raising their foreign loan repayment obligations in naira terms.
Lagos State remained the most indebted in foreign currency, accounting for 26.9% of the total foreign debt, equivalent to $1.24bn.
The DMO’s report comes after BudgIT’s report said that the 32 states of the federation relied on FAAC for at least 55 per cent of their total revenue in 2023.
According to the 2024 report released last week, the development paints the over-reliance of state governments on federally distributable revenue and accentuates the vulnerability of the state governments to crude oil-induced shocks and other external shocks.
The report further said that 14 states relied on FAAC receipts for at least 70 per cent of their total revenue. Furthermore, transfers to states from the federation account comprised at least 62 per cent of the recurrent revenue of 34 states, except Lagos and Ogun, while 21 states relied on federal transfers for at least 80 per cent of their recurrent revenue.
In the 2023 fiscal year, the combined revenue of all 36 states in Nigeria increased significantly by 31.2 per cent from N6.6tn in 2022 to N8.66tn.
This growth rate exceeded the previous year’s increase of 28.95 per cent, indicating a notable improvement in fiscal performance.
Of the total revenue generated in 2023, Lagos State contributed N1.24tn, representing 14.32 per cent of the cumulative revenue of the 36 States.
Gross FAAC, which grew by 33.19 per cent from N4.05tn in 2022 to N5.4tn in 2023, contributed to 65 per cent of the year-on-year growth of the combined revenue of the 36 states.
“32 states relied on FAAC receipts for at least 55 per cent of their total revenue, while 14 states relied on FAAC receipts for at least 70 per cent of their total revenue.
“Furthermore, transfers to states from the federation account comprised at least 62 per cent of the recurrent revenue of 34 states, except Lagos and Ogun, while 21 states relied on federal transfers for at least 80 per cent of their recurrent revenue.
“The picture painted above buttresses the over-reliance of the state governments on federally distributable revenue and accentuates their vulnerability to crude oil-induced shocks and other external shocks.”
The report provides a detailed analysis of states’ fiscal sustainability, examining how well they balance internally generated revenue against federal allocations.