New findings have revealed that Nigeria’s total public debt may surge to N118.37tn over the next three years.
This projection is based on an analysis of Nigeria’s current debt profile and the debt projections outlined in the Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) 2024-2026.
According to the MTEF/FSP, the Federal Government intends to secure loans amounting to N26.42tn between 2024 and 2026.
The document also highlights that debt servicing will consume N29.92tn during this three-year period.
Data reveals that the Nigerian government plans to borrow N7.81tn in 2024, slightly less than the N8.84tn initially targeted for the same year in the previous MTEF/FSP.
The breakdown for 2024 indicates that the government plans to obtain N6.04tn from domestic lenders and N1.77tn from foreign creditors.
In 2025, the Federal Government intends to borrow N8.54tn, which is also a reduction compared to the N10.62tn targeted for the same year in the previous MTEF/FSP.
The breakdown for 2025 illustrates that the government plans to acquire N6.42tn from domestic lenders and N2.12tn from foreign creditors.
For 2026, the Federal Government’s borrowing plan is N10.07tn, comprised of N8.94tn in domestic loans and N1.13tn in external debt.
Interestingly, the analysis indicates a shift towards reduced reliance on foreign loans, with the Federal Government emphasizing borrowing from domestic lenders.
The data highlights that Nigeria borrowed approximately N5.05tn between January and June of the N9.62tn borrowing plan for 2023.
This suggests that the government may need to secure at least N4.57tn more in the remaining months of the year.
The Debt Management Office recently reported that Nigeria’s total public debt reached N87.38tn by the end of the second quarter, marking a 75.29 percent increase, or N37.53tn, compared to the figure of N49.85tn recorded at the end of March 2023.
This escalation is attributed to factors such as the N22.7tn Ways and Means Advances from the Central Bank of Nigeria to the Federal Government and naira devaluation, which added approximately N13.38tn to the external debt figure.
With an existing debt of N87.38tn as of June 2023, the likelihood of incurring N4.57tn in new debt by the end of this year, and the plan to borrow N26.42tn over three years, Nigeria’s total public debt is projected to surpass N118.37tn by the end of 2026, considering subnational borrowing.
Despite the mounting debt, the Federal Government remains steadfast in its borrowing plan.
President Bola Tinubu has expressed concerns about the nation’s overreliance on borrowing, emphasizing the need for substantial changes to secure a brighter future for the country. Nevertheless, the government maintains its borrowing course.
As a result of increasing debt, the cost of debt servicing has risen significantly over the years for the Federal Government.
The World Bank predicts that debt servicing will absorb 123.4 percent of the government’s revenue in 2023.
Between January and July 2023, the Federal Government already allocated 75.92 percent of its total revenue to debt servicing.
The analysis also shows that debt servicing is expected to reach approximately N29.92tn over the next three years.