Nigeria spends N3.82tr on debt service between Q1 2021 and Q1 2022
By Jeph Ajobaju, Chief Copy Editor
Nigeria spent N2.93 trillion on debt servicing in entire 2021 and N896.56 billion in the first quarter ended March 2022 (Q1 2022), a total N3.82 trillion in the 15 months, according to Debt Management Office (DMO) data.
Domestic debt servicing cost N310.5billion and foreign debt servicing $286.35 million (N118.9 billion) in Q4 2021, a total N429.4billion.
Servicing domestic debt cost N668.69 billion and external debt $548.79 million (N227.87 billion) in Q1 2022, a total N896.56 billion.
Meaning debt servicing cost rose 109 per cent from N429 billion in Q4 2021 to N896.56 billion in Q1 2022.
The naira conversion is based on the official Central Bank of Nigeria (CBN) exchange rate of N415.22/$1 as of 15 June 2022.
National debt grew by N2.04 trillion to N41.60 trillion in Q1 2022 from N39.56 trillion in Q4 2021.
DMO data shows debt servicing cost in the first three quarters of 2021 as follows:
- Q1 2021 – domestic N612.71 billion, foreign $1 billion (N415.22 billion), total N1.03 trillion
- Q2 2021 – domestic N322.7 billion, foreign $299 million (N124.15billion), total N446.85 billion
- Q3 2021 – domestic N808.49 billion, foreign $520.78 million (N216.24 billion), total N1.02 trillion
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Debt servicing may take 100% of revenue
Finance Minister Zainab Ahmed expressed concern at the launch of the World Bank’s Nigeria Development Update on 14 June that fuel subsidy hurts Nigeria’s ability to service its debt.
“Already we have borrowing increasing significantly and we are struggling with being able to service debt because even though revenue is increasing, the expenditure has been increasing at a much higher rate so it is a very difficult situation,” she said, per The PUNCH.
The International Monetary Fund has warned that debt servicing may gulp 100 per cent of Nigeria’s revenue by 2026 if it fails to implement adequate measures to improve revenue generation.
IMF Resident Representative for Nigeria Ari Aisen disclosed this on 28 April when he presented the Sub-Saharan Africa Regional Economic Outlook report in Abuja.
Said he: “The biggest critical aspect for Nigeria is that we have done a macro-fiscal stress test, and what you observe is the interest payments as a share of revenue and as you see us in terms of the baseline from the federal government of Nigeria, the revenue almost 100 per cent is projected by 2026 to be taken by debt service.
“So, the fiscal space or the amount of revenues that will be needed, and this without considering any shock, is that most of the revenues of the federal government are now, in fact, 89 per cent and it will continue if nothing is done to be taken by debt service.”
