Nigeria’s spending on debt servicing surged to a staggering N7.8 trillion in 2023, marking a notable 121% increase compared to the previous year’s figure. This insight, drawn from a comprehensive analysis by the Debt Management Office (DMO), sheds light on the country’s evolving fiscal landscape.
Breakdown of the data indicates a substantial escalation in both domestic and external debt servicing costs. Domestic debt servicing reached N5.23 trillion, surging by 104% from the previous year. Similarly, expenditures on external debt servicing soared by 167% to N2.57 trillion, compared to 2022.
The surge in debt servicing expenses can be attributed partly to the devaluation of the local currency, exacerbating costs associated with servicing foreign debt obligations. This challenge compounded the Central Bank of Nigeria’s struggle with foreign exchange liquidity crises and exchange rate fluctuations.
Moreover, the actual debt servicing costs surpassed the budgeted sum of N6.56 trillion, reflecting the gravity of Nigeria’s fiscal predicament. Debt servicing accounted for a substantial portion of the government’s total expenditure, constituting 45.6% between January and September 2023.
Looking ahead, Nigeria anticipates increased borrowings to bridge a budget deficit exceeding N10 trillion in 2024. Discussions with international financial institutions aim to secure loans addressing critical challenges faced by Internally Displaced Persons (IDPs) and rural communities.
Despite proposed debt servicing expenses of N8.25 trillion for 2024, representing 28.7% of the total budget, challenges persist. The nation’s total debt stock surged by 110% to N97.34 trillion by December 2023, underscoring the urgency of addressing Nigeria’s burgeoning debt burden and ensuring sustainable fiscal policies.
Credit: Nairametrics (Text Excluding Headline)
