The Federal Government of Nigeria has expended a total of $15.55 billion on debt servicing from 2019 to 2024, according to recent data from the Central Bank of Nigeria (CBN).
In 2019, the country paid $588.33 million on debt servicing between January and May. This figure surged to $5.40 billion in 2020. The trend of rising debt service payments continued with $2.02 billion in 2021, $2.34 billion in 2022, and $3.43 billion in 2023. Between January and May 2024 alone, Nigeria paid $2.18 billion, marking a 270.9% increase compared to the same period in 2019.
The $2.18 billion paid by May 2024 is nearing half of the $4.8 billion projected by Fitch Ratings for the entire year. Despite the government’s stated focus on shifting towards domestic borrowing, external debt servicing costs remain substantial. Fitch Ratings anticipates that Nigeria’s external debt servicing will increase by $400 million to $5.2 billion in 2025, raising concerns about the country’s debt sustainability.
The CBN’s International Payments Data indicates that the highest debt financing expenditure over the past five years occurred in 2020, with a total of $5.40 billion. In 2023, Nigeria’s external debt service payments rose significantly by $1.1 billion, reaching $3.5 billion according to FBNQuest Research. This includes $1.9 billion in market debt payments and $1.6 billion in non-market debt payments.
Looking ahead, the Federal Government plans to incur additional external debt, including N1.8 trillion in commercial borrowing and N1.1 trillion in concessional loans as outlined in the 2024 budget. FBNQuest Research predicts further increases in external debt service payments, echoing Fitch Ratings’ forecasts, due to the government’s intentions to access commercial debt markets and increased borrowing from concessional sources.
Recently, the government secured $2.25 billion from the World Bank to support President Bola Tinubu’s economic reforms. This assistance comprises $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, 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 World Bank loan as “virtually a grant,” aimed at supporting the government’s economic reforms and development initiatives.
The report emphasized that the principal objective of these programs is to increase non-oil revenues and safeguard oil and gas revenues.
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