FG Spends $15bn on Debt Repayment in 5 Years

Five years of debt servicing cost FG $15 billion.

Nigeria's debt servicing costs hit $15.55 billion between 2019 and 2024, with a significant increase in external debt servicing payments, raising concerns about the country's ability to manage its debt burden.

The Federal Government paid a total of $15.55 billion on debt servicing between 2019 and 2024, according to the most recent figures from the Central Bank of Nigeria, or CBN.

Nigeria paid $588.33 million in debt payments from January to May of this year. At $5.40 billion, the 2020 payment represented a huge increase.

Following in 2021, 2022, and 2023, the debt service payments increased to $2.02 billion, $2.34 billion, and $3.43 billion.

The CBN reports that between January and May 2024, the nation paid $2.18 billion toward debt service, which is 270.9 percent more than the $588.33 million paid during the first five months of 2019.

The $2.18 billion paid by May 2024 will almost certainly be less than half of the $4.8 billion Fitch Ratings had estimated for the full year.

The administration claims to be focussing on domestic borrowing, but this growth persists.

According to Fitch Ratings, Nigeria's foreign debt servicing will rise by $400 million to $5.2 billion in 2025, which raises questions about the country's ability to service its debt.

The Federal Government spent $5.40 billion, the most in the last five years, on debt financing in 2020, according to the CBN's International Payments Data.

Nigeria's payments for servicing its external debt increased significantly by $1.1 billion, to $3.5 billion in 2023, according to FBNQuest Research.

Market loan payments totaling $1.9 billion and non-market debt payments totaling $1.6 billion are included in this breakdown. Furthermore, as stated in the 2024 budget, the Federal Government intends to incur additional external debt, including N1.8 trillion in commercial borrowing and N1.1 trillion in concessional loans.

Nigeria's payments for servicing its external debt increased significantly by $1.1 billion, to $3.5 billion in 2023, according to FBNQuest Research.

Market loan payments totaling $1.9 billion and non-market debt payments totaling $1.6 billion are included in this breakdown. Furthermore, as stated in the 2024 budget, the Federal Government intends to incur additional external debt, including N1.8 trillion in commercial borrowing and N1.1 trillion in concessional loans.

As predicted by Fitch Ratings, FBNQuest Research expects a further increase in external debt servicing payments. The government's intentions to tap into the commercial debt markets and the anticipated rise in borrowing from concessional sources are to blame for this.

The World Bank recently granted the Federal Government $2.25 billion to aid in President Bola Tinubu's economic reforms.

The financing is split into two packages: the Nigeria Accelerating Resource Mobilization Reforms Program-for-Results ($750 million) and the Nigeria Reforms for Economic Stabilization to Enable Transformation Development Policy Financing Program ($1.5 billion).