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Data from the Central Bank of Nigeria (CBN) has revealed that Nigeria’s debt servicing reached approximately $2.2 billion in the first five months of this year.
This figure is nearly half of the $4.8 billion projected for the entire year by Fitch Ratings, which also predicted a rise in Nigeria’s external debt servicing to $5.2 billion next year.
Despite the government’s emphasis on borrowing from the domestic market, debt servicing remains substantial.
According to the CBN International Payments Data, the Federal Government (FG) spent the highest on debt financing in May, totaling $854.36 million, marking the highest monthly payment in the past year.
This amount is about 297 percent higher than what was spent on debt servicing in April and 286.49 percent higher than May 2023’s expenditure of $221.05 million.
In previous months of 2024, the FG’s debt servicing expenditures were as follows: $215.20 million in April, $276.16 million in March, $283.22 million in February, and $560.52 million in January.
The total debt servicing amount is approximately 96.32 percent higher than what the FG spent during the same period in 2023, which stood at $1.12 billion.
FBNQuest Research indicates that Nigeria’s external debt service payments rose by $1.1 billion to $3.5 billion in 2023, comprising $1.9 billion and $1.6 billion in market and non-market debt payments, respectively.
Based on the 2024 budget, the FG plans additional external borrowing of N1.8 trillion and another N1.1 trillion in loans from concessional lenders.
Following Fitch Ratings’ projection, FBN Quest anticipates a rise in external debt service payments due to the FG’s plans to raise loans from the commercial debt market this year and an expected increase in borrowings from concessional sources.
Finance Minister and Coordinating Minister of the Economy, Wale Edun, disclosed that Nigeria will receive funding from the World Bank in a few weeks, including a $2.25 billion package with low interest rates and no conditionalities.
Additionally, the FG plans to raise funds through a Eurobond issuance in the second half of 2024, with Citibank NA, Goldman Sachs, and JPMorgan Chase & Co serving as advisors, as reported by Bloomberg.
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