Nigeria spent a sum of N7.8 trillion to service its debt obligations in 2023, a 121% increase compared to N3.52 trillion incurred in the previous year.
This is according to analysis of data released by the Debt Management Office (DMO).
The breakdown of the data shows that domestic debt service cost stood at N5.23 trillion, representing a 104% increase from the previous year’s N2.56 trillion, while external debt service surged by 167% to N2.57 trillion, compared to N962.5 billion recorded in 2022.
The significant jump in Nigeria’s debt service cost was partly due to the devaluation of the local currency, which drove the cost of servicing foreign debt obligations as the CBN grappled with FX liquidity crisis and exchange rate volatility.
The prevailing exchange rate for the quarterly periods as provided by the DMO were used to convert the external debt cost from dollar to naira.
It is worth noting, that the debt service cost in the review year, surpassed the N6.56 trillion that was earmarked for the year. According to the budget document obtained from the Budget Office, the federal government had budgeted N6.56 trillion for debt servicing, which is made up of N3.29 trillion (domestic), N1.81 trillion (external), N247.7 billion (sinking fund), and N1.2 trillion as interest on Ways & Means debt to the CBN.
Nigeria continues to grapple with dwindling revenue amidst rising fiscal expenditure, with debt servicing gulping a huge chunk of government budget. According to data from the Budget Office, debt servicing accounted for 45.6% of its total expenditure between January and September 2023.
Also, compared to revenue generated in the same period, debt service gulped about 80.9% of the total federal government revenue in the nine months period. Notably, retained revenue stood at N7.51 trillion while debt service as of September 2023 was N5.79 trillion.
The Nigerian government is set to increase its borrowings in 2024, on the back of an over N10 trillion budget deficit, after President Bola Tinubu signed the 2024 budget of N28.7 trillion, with a projected revenue of N18.32 trillion for the period.
