With its current N44.06triillion total debt stock as of September 2022, Nigeria has spent N3.04trillion to service external and domestic debts in nine months of 2022, representing an increase of 23.4 per cent Year-on-Year (YoY) from N2.46 trillion reported in nine months of 2021, Debt Management Office (DMO) data has revealed.
A breakdown of the N3.04 trillion debt service payments revealed a total N2.15trillion was used by the federal government to service domestic debts in nine months of 2022.
The DMO numbers revealed that federal government debt service payments for domestic debts such as Treasury bill, FBN Bond, Green Bond and Sukuk bond borrowings increased by 23.5 per cent YoY in nine months of 2022 over the need to bridge 2022 budget finance deficit.
On the external side, the FG debt service payments with multilateral, bilateral, Eurobond and Diaspora Bond also increased by 23.14 per cent in the period under review.
Analysis of the DMO data revealed that the federal government domestic debt service payments in first quarter of 2022 was N668.69 billion but dropped to N664.7billion in Q2 2022. The figure increased to N820.59billion in Q3 2022 as government intensified selecting N685.61 billion FGN Bonds borrowing.
On the flipside, the government serviced its external debt with N288.5billion or $694.01million in Q1 2022 and N247.98billion or $597.95million in Q2 2022, according to DMO report.
In Q3 2022, the government debt service payment closed at N346.43billion or $801.23million.
The government has intensified its external borrowing debt service payment with international agencies such International Development Association (IDA), EXIM Bank of China and Eurobond.
DMO Data revealed that the federal government debt service payments with EXIM Bank increased to $252.07 million in nine months of 2022 from $207.67million reported by the DMO in corresponding nine months of 2021.
The government had borrowed from these agencies to finance projects such as Nigeria Railway Modernisation Project (Idu-Kaduna Section), Nigeria Railway Modernisation Project (Lagos – Ibadan Section), Nigeria Abuja Light Rail Project, Nigeria ICT Infrastructure Backbone Project, Nigeria Four Airport Terminals Expansion Project and Nigerian Zungeru Hydroelectric Project.
Other projects are: Nigerian Rehabilitation and Upgrading of Abuja-Keffi-Makurdi Road Project, Nigeria Greater Abuja Water Supply Project and Nigeria National ICT Infrastructure Backbone Phase II Project.
Experts have raised concerns as the federal government continues to obtain new loans from both local and external sources, despite growing debt profile and servicing cost.
Director-General, Debt Management Office (DMO), Patience Oniha, recently in Lagos disclosed that the federal government between 2015 and 2021 debt service payment was N14.86trillion and revenue generated was N25.43 trillion.
She also disclosed that debt service payment between January and June 2022 was N3.09 trillion, while revenue was N3.66trillion.
She, thus, stressed the need for Nigeria to operate an efficient tax administration to tackle revenue challenges.
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