…FG Spent N3.8tn Servicing Debt In 8 Months
President Bola Tinubu on Tuesday wrote to the National Assembly to approve a fresh N1.767tn as a new external borrowing plan in the 2024 appropriation act.
Tinubu’s request was read by the Speaker of the House of Representatives, Tajudeen Abbass, during plenary on Tuesday.
According to the president, the loan is based on an exchange rate of N800 to $1.
Accordingly, if approved, the loan will be used to part-finance the budget deficit of N9.7 trillion for the 2024 budget.
The president has also forwarded the MTEF/FSP 2025-2027 to parliament and the National Social Investment Programme establishment amendment bill to make the social register the primary tool for the implementation of the federal government’s social welfare programmes.
The Federal Executive Council, had last Thursday approved a $2.2bn external borrowing plan as part of the Federal Government’s 2024 Appropriation Act financing program.
With the latest move to get an additional $2.2bn fresh borrowing plan, Nigeria’s external debt may increase to $45.1bn by the end of 2024.
Nigeria’s total external debt as of the first quarter of this year stood at
$42.12bn.
Meanwhile, the cost of servicing Nigeria’s foreign debt has risen by 107.7 per cent to reach N3.8tn, significantly exceeding the projections outlined in the 2024 budget between January and August.
This is contained in the 2025-2027 Medium Term Expenditure Framework and Fiscal Strategy (MTEF & FSP) published by the Budget Office.
The 2024 budget initially projected foreign debt servicing costs at N1.83tn, but actual spending rose to N3.8tn within the same period, resulting in an increase of N1.97tn, according to the report.
The total amount budgeted for debt servicing during the period—including domestic debt, foreign debt, sinking funds, and interest on FGN bonds for securitized ways and means—was N7.41tn.
However, the government has paid N5.51tn so far, representing 34.4 per cent of the total budgeted amount. This shows the mounting pressure on public finances as debt servicing continues to consume a significant portion of government expenditure.
As of 2024, Nigeria’s national debt has reached alarming levels, significantly increasing under President Bola Tinubu’s administration. By June 2024, Nigeria’s total public debt was reported at N134.2tn, up from N87.3tn in June 2023. This represents a record increase of N46.9tn.
The government has continued to borrow heavily, particularly from both domestic and external sources, despite growing concerns about the sustainability of such debt. Domestic debt alone has reached N71.2tn, while external debt is at N63tn.
The country’s reliance on loans has drawn considerable attention, especially given the rising debt servicing costs. For instance, in the first half of 2024, Nigeria spent $3.58bn servicing foreign debt, marking a nearly 40% increase from 2023.
The devaluation of the naira has further compounded the external debt burden, amplifying its local currency cost.
Debt per capita, which refers to the average amount each Nigerian owes, has surged to approximately N620,000. This is a stark figure considering Nigeria’s large population of over 216 million people. Such debt levels raise concerns about the long-term economic stability of the country and the ability to service these obligations without exacerbating fiscal pressures.