According to the data that is currently available, the cost of servicing Nigeria’s debt has jumped by 55.71% to N1.24 trillion in just three months.
According to information received from the Debt Management Office, Nigeria spent a total of N550.51 billion between October 2022 and December 2022 on servicing its overseas debt as well as its domestic debt, totaling N406.77 billion and $312.27 million, respectively.
However, between January and March 2023, Nigeria spent N874.13 trillion on servicing domestic debt while spending an additional N368.87 trillion (or $801.36 million) on servicing external debt.
The external debt servicing was done using the DMO’s exchange rate of $1=N460.3.
The Federal Government expects to spend 82% of its revenue on interest payments in 2023, according to latest data from the International Monetary Fund.
The IMF projects that external debt, including private sector debt, will increase to $121.6 billion, while external reserves will increase to $37.5 billion.
This was stated in the document’s “IMF Executive Board Concludes 2022 Article IV Consultation with Nigeria Summary,” which included a table of forecasts.
According to the forecasts, less money will be utilized by the government to pay interest, with the percentage falling from 96.3% in 2022 to 82.3% in 2023.
In addition, it stated that in 2020 and 2021, respectively, interest payments were 86.1% and 87.8% of the federal government’s revenue.
The DMO noted that excessive debt levels would frequently result in costly debt services and have an impact on investments in infrastructure in a memo by the DMO DG that Punch had acquired.
“High debt levels lead to heavy debt service,” the DMO DG claims, “which reduces resources available for investment in infrastructure and key sectors of the economy.”
She emphasized the need for debt sustainability in the document, which she defined as the capacity to service all current and future obligations while maintaining the ability to finance policy goals without turning to excessively large adjustments or exceptional financing, like arrears accumulation and debt restructuring, which could otherwise jeopardize the stability of the economy.