Nigeria spends $112m to service debt, Lagos leads indebted states
By Jeph Ajobaju, Chief Copy Editor
Nigeria spent $112.35 million to service external debt in January, according to data compiled in the Weekly International Payments of the Central Bank of Nigeria (CBN).
The amount spent in January was 146.17 per cent higher than the $45.64 million spent in December 2022, even as Abuja struggled to raise revenue levels amid dwindling oil dollar intakes.
To underscore that, the Federation Account Allocation Committee (FAAC) shared N750.17 billion among the three tiers of government in January 2023, a decrease of N240.02 billion against N990.19 billion shared in December 2022.
Nigeria spent $2.4 billion on servicing external debt in 2022, an increase from the $2.11 billion spent in 2021.
The federal government in 2022 deducted more than N78 billion from allocation to states for external debt servicing, as shown in data produced by the FAAC and published by the National Bureau of Statistics (NBS).
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Deductions from state allocations
The deductions were made from allocation to states from the Federation Account – now managed under a legal framework that shares funds under three major components: statutory allocation, Value Added Tax distribution, and derivation principle, per reporting by The PUNCH.
States most hit by deductions for external debt servicing in 2022 were Lagos (N23.61 billion), Kaduna (N10.25 billion), and Cross River (N7.56 billion).
The International Monetary Fund (IMF) recently reiterated Abuja projects to spend 82 per cent of its revenue on interest payments in 2023.
According to the IMF, external debt (including private sector debt) will rise to $121.6 billion with external reserves climbing to $37.5 billion.
IMF also projects improvement in the share of government revenue used as interest payment, which is expected to fall from 96.3 per cent in 2022 to 82 per cent in 2023.
Interest payment from federal government revenue was 86.1 per cent in 2020 and 87.8 per cent in 2021, the IMF said.