The CBN reports that Nigeria’s federal government spent $3.5 billion on international debt servicing over the past nine months, highlighting growing financial strains.
During the first nine months of 2024, the Federal Government allocated $3.58 billion to service the country’s foreign debt.
According to a report on international payment statistics by the Central Bank of Nigeria (CBN), this figure signifies a 39.77 percent rise compared to the $2.56 billion spent in the same period in 2023.
The report indicates that the peak monthly debt servicing payment in 2024 was $854.37 million, occurring in May, while the highest monthly expenditure for 2023 reached $641.70 million and was recorded in July.
The pattern of international debt servicing by the CBN underscores Nigeria’s increasing cost of meeting its debt obligations.
A detailed analysis of international debt figures revealed that in January 2024, the costs associated with servicing debts skyrocketed by 398.89%, increasing to $560.52 million from $112.35 million in January 2023. In contrast, February experienced a modest drop of 1.84%, as payments decreased from $288.54 million in 2023 to $283.22 million in 2024.
In March, payments decreased by 31.04%, dropping from $400.47 million in the same period last year to $276.17 million this year. Conversely, April experienced a dramatic increase of 131.77%, with payments reaching $215.20 million in 2024 compared to just $92.85 million in 2023.
In May 2024, debt servicing payments reached their peak at $854.37 million, marking a significant increase of 286.52 percent from the $221.05 million paid in May 2023. Conversely, June experienced a decrease of 6.51 percent in payments, with only $50.82 million spent in 2024 compared to $54.36 million the previous year.
In July 2024, payments decreased by 15.48 percent to $542.50 million from $641.70 million in July the previous year. In August, there was a further reduction of 9.69 percent with payments amounting to $279.95 million compared to $309.96 million in August 2023. Conversely, September 2024 experienced a growth of 17.49 percent as payment amounts increased to $515.81 million from last year’s figure of $439
Given the increasing exchange rates, the data raises concerns about the mounting pressure of Nigeria’s foreign debt obligations.
On Monday, Channels Television announced an increase in the debts of all 36 states across the federation.
As of June 30, 2024, the combined debts of Nigeria’s 36 states increased to N11.47tn, despite distributions from the Federal Accounts Allocation Committee (FAAC) and their individual internally generated revenues (IGR).
An analysis of data from the public debt reports issued by the Debt Management Office (DMO) indicated that there was a 14.57 percent increase compared to the N10.01 trillion recorded in December 2023.
The external debt for the states and the Federal Capital Territory increased from $4.61 billion to $4.89 billion during the period under review.
Expressed in naira, the debts surged by 73.46 percent, rising from N4.15 trillion to N7.2 trillion due to the devaluation of the naira from N899.39 per dollar in December 2023 to N1,470.19 per dollar by June 2024.
However, the domestic debt for states and the FCT decreased from N5.86 trillion to N4.27 trillion.
Overall, the states and the FCT represented Nigeria’s public debt of N134.3 trillion in June 2024. This marks a decrease from their 10.29 percent share recorded in December 2023, despite an increase in their nominal debt levels during this period.
Earlier, Channels Television reported that in 2023, sub-national governments were still heavily dependent on borrowing to fund their budgets. This led to a substantial increase of 38.1% in the total debt stock across the 36 states, rising from N7.25 trillion in 2022 to N10.01 trillion.
As outlined in BudgIT’s 2024 State of States report published on Tuesday, the increase in debt was partly attributed to a N606.12 billion rise in domestic debt, leading to an average annual growth rate of 11.4% by December 31st, 2023.
The overall domestic debt amounted to N5.86 trillion.
The situation became more complex due to the increase in foreign debt, which rose by 4.1% from $4.43 billion in 2022 to $4.61 billion in 2023.
The report states that the liberalization of the exchange rate intensified financial pressure on states, substantially increasing their foreign loan repayment responsibilities in terms of naira.
READ ALSO: Debt of Nigeria’s 36 States Climbs to N11.4 Trillion Despite Revenue Generation Efforts
Lagos State continued to hold the highest foreign currency debt, representing 26.9% of the nation’s total external debt at $1.24 billion.
The DMO’s report follows BudgIT’s findings, which indicated that in 2023, the 32 states of the federation depended on FAAC for at least 55 percent of their total revenue.
According to the report from 2024 published last week, this development highlights state governments’ over-dependence on federally distributable revenue and underscores their susceptibility to shocks induced by crude oil fluctuations and other external factors.
The report also indicated that 14 states depended on FAAC receipts for at least 70% of their total revenue. Additionally, transfers from the federation account made up at least 62% of the recurrent revenue for all but two—Lagos and Ogun—of 34 states. Furthermore, federal transfers accounted for at least 80% of the recurrent revenue in 21 states.
In the 2023 fiscal year, the total revenue for all 36 states in Nigeria saw a substantial rise of 31.2%, growing from N6.6 trillion in 2022 to N8.66 trillion.
This growth rate surpassed the previous year’s increase of 28.95%, highlighting a significant enhancement in fiscal performance.
Lagos State contributed N1.24 trillion to the total revenue generated in 2023, accounting for 14.32 percent of the combined revenue from all 36 states.
The gross FAAC experienced a 33.19 percent increase, rising from N4.05 trillion in 2022 to N5.4 trillion in 2023, and accounted for 65 percent of the year-on-year growth in combined revenue across all 36 states.
Thirty-two states depended on FAAC receipts for a minimum of 55% of their total revenue, whereas fourteen states relied on FAAC receipts for at least 70% of their total income.
Additionally, transfers from the federation account made up at least 62% of the recurrent revenue for 34 states, with Lagos and Ogun being exceptions. Moreover, 21 states depended on federal transfers for a minimum of 80% of their recurrent revenue.
The above description highlights the state governments’ excessive dependence on federally distributed revenue and underscores their susceptibility to crude oil-related shocks as well as other external disruptions.
The report offers an in-depth analysis of the fiscal sustainability of states, evaluating how effectively they balance internally generated revenue with federal allocations.
