In the last six months, the federal government of Nigeria has spent nothing less than ₦2.34 trillion on debt servicing, amid serious economic challenges.
DMO logoWhile President Bola Tinubu’s effort at revamping the economy continues, the federal government is spending huge resources service debt.
Information gathered from the Debt Management Office, has it that, Nigeria’s debt servicing slowed to ₦849.58 billion in the second quarter of 2023.
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This is a decrease of 43.04% compared to ₦1.49tn, spent in Q1 2023 on servicing debt.
In the first quarter of 2023, Nigeria spent ₦874.13 billion on domestic debt servicing, while spending $801.36 million (₦617.35 billion) on external debt servicing, giving a total of ₦1.24 trillion.
But between, April and June 2023, ₦565.88 billion was spent on domestic debt servicing, and $368.26 million (₦283.7 billion) on external debt servicing, a total of ₦849.58 billion.
At the official exchange rate of $1 to ₦770.38, the DMO is servicing Nigeria’s debt. In six months, a total of ₦2.34 trillion was spent on servicing the country’s debt.
Also, where Nigeria spent about $131.13 million servicing loans from the Exim Bank of China, nothing was spent in Q1, 2023 on Chinese loans.
Nigeria’s Public Debt Hit ₦87.38 trillion In June 2023
Despite the decrease in the cost of debt servicing, Nigeria’s total public debt hit ₦87.38 trillion at the end of June 2023.
The figure represented an increase of 75.29% or ₦37.53 trillion compared to ₦49.85 trillion recorded at the end of March 2023.
The DMO, in a statement, said the debt included the ₦22.71 trillion Ways and Means Advances of the Central Bank of Nigeria to the Federal Government.
The statement also noted that other additions to the debt stock were new borrowings by the Federal Government and the sub-nationals from local and external sources.
Domestic And External Debt Rises By 79.18%, 69.28%.
There was a significant increase in both domestic and external debt within three months.
The domestic debt rose by 79.18% from ₦30.21 trillion, while the external debt rose by 69.28% from ₦19.64 trillion in Q1 2023.
In its 2022 Debt Sustainability Analysis Report, the DMO warned that the Federal Government’s projected revenue of ₦10 trillion for 2023 could not support fresh borrowings.
According to the office, the projected government’s debt service-to-revenue ratio of 73.5% for 2023 was high and a threat to debt sustainability.
It noted that the government’s current revenue profile could not support higher levels of borrowing.
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The International Monetary Fund recently said the Federal Government projected to spend 82% of its revenue on interest payments in 2023.
The World Bank also projected that debt servicing would gulp 123.4% of the Federal Government’s revenue in 2023.
President Bola Tinubu recently said the country could not continue to service its debt with 90% of its revenue.
He noted that the country was headed for destruction if that continued.
