In the second quarter of 2023, Nigeria’s spending on debt servicing experienced a significant slowdown, dropping to N849.58 billion.
This marks a 43.04% decrease compared to the N1.49 trillion spent on debt servicing in the first quarter of the year.
Data from the Debt Management Office (DMO) revealed that between January and March 2023, Nigeria allocated N874.13 billion for domestic debt servicing and $801.36 million (equivalent to N617.35 billion) for external debt servicing, totaling N1.24 trillion.
However, during the period from April to June 2023, the country’s expenses on domestic debt servicing amounted to N565.88 billion, while external debt servicing cost $368.26 million (approximately N283.7 billion), again totaling N1.24 trillion.
The exchange rate of $1 to N770.38 was applied for external debt servicing calculations. Over the first six months of the year, Nigeria spent a total of N2.34 trillion servicing its debt.
Total public debt hits N87.38 trillion
It’s worth noting that in the first quarter of 2023, there were no expenditures related to servicing loans from the Exim Bank of China, which contrasted with the previous quarter when approximately $131.13 million was allocated for this purpose.
Despite the decrease in debt servicing costs, Nigeria’s total public debt reached N87.38 trillion by the end of June 2023.
This figure represents a significant increase of 75.29%, equivalent to N37.53 trillion, compared to the N49.85 trillion recorded at the end of March 2023.
The DMO clarified that this debt figure incorporates the N22.71 trillion Ways and Means Advances from the Central Bank of Nigeria to the Federal Government.
It includes new borrowings by the Federal Government and sub-national entities from both local and external sources.
Both domestic and external debt experienced substantial growth within a three-month period.
Domestic debt surged by 79.18%, rising from N30.21 trillion, while external debt increased by 69.28% from N19.64 trillion in the first quarter of 2023.
The DMO had previously cautioned that the Federal Government’s projected revenue of N10 trillion for 2023 would not be sufficient to support additional borrowings.
The office noted that the projected debt service-to-revenue ratio of 73.5% for 2023 was alarmingly high and posed a threat to debt sustainability.
It emphasized that the current revenue profile could not support further borrowing.
The International Monetary Fund (IMF) and the World Bank have also expressed concerns about Nigeria’s debt situation.
The IMF stated that the Federal Government was projected to spend 82% of its revenue on interest payments in 2023, while the World Bank estimated that debt servicing would consume 123.4% of the government’s revenue in the same year.
President Bola Tinubu recently voiced his apprehensions, warning that Nigeria could not continue servicing its debt with 90% of its revenue, stating that such a trajectory would lead the country towards destruction.