The Nigerian Debt Management Office has announced in a publication that the country’s public debt now stands at N42.84 trillion. According to the details, the external debt of the country stands at N16.61 trillion while the Domestic Debt stands at N26.23 trillion.
States and FCT owe N5.281 trillion total domestic debt and a total of N1.892 trillion external debt.
This development means that the public debt of the country has increased by N1.24 trillion between March and June, 2022.
This development means that between 2012 and 2022, Nigeria’s Public debt stock increased by 467%.
Nigeria’s endless borrowing has elicited concerns from many quarters with the country unable to meet its fiscal needs or up its revenue generation sources, leading to further reliance on debts to meet financial obligations.
Details on the MTEF document of the country shows a plan to borrow N4.89 trillion in 2022, this figure is broken into N2.44 trillion for domestic debt and N2.44 trillion for foreign debt. However, between January and June 2022 Nigeria has already borrowed N3.29 trillion and if debt stock rises at the same rate for the rest of the year, Nigeria would have borrowed N6.59 trillion in 2022 alone; exceeding its own projection by 34.76%.
This raises concerns on the ability to borrow within the N4.89 trillion it plans for 2022, especially if it continues to borrow at the same rate of the first six months. This is further strengthened by the increase in the 2022 budget deficit which has grown from N6.386 trillion to N7.157 trillion.
In 2023, Nigeria plans to make a revenue of N8.46 trillion but has an expenditure of N19.76 trillion, showing a budget deficit of N11.3 trillion, a gap that will be filled with largely borrowings.
The Debt and Debt Servicing Debacle
With Nigeria’s borrowings comes debt servicing. Details released on the Debt Management Office website have shown that the country spent the sum of N664.728 billion on domestic debt servicing between April and June, 2022. This is broken down into N529.881 billion in April, 2022, N66.971 billion in May and N67.875 billion in June.
Earlier, between January to March, domestic Debt Service gulped N668.685 billion.
A total sum of $597.951 million dollars was spent on external debt servicing between April and June, 2022 while the sum of $694.009 million was spent between January and March on external debt service.
This would mean that between January and June, Domestic debt service took the sum of N1.333 trillion, while external debt servicing stood at $1.291 billion.
A Dataphyte report had noted that Nigeria intends to spend the sum of N6.31 trillion on debt servicing in 2023, despite plans to make N8.46 trillion as revenue. This means that the government plans to use 74.6% of its revenue on debts servicing in 2023.
In 2024, Nigeria plans to spend N6.1 trillion on debt servicing, although the capability of the country to spend just that has been called into question by the astronomical growth in its budget deficit and declining revenue.
Already, the International Monetary Fund (IMF)has warned that debt servicing may gulp all of Nigeria’s revenue by 2026.