- FG Spends N2.1trn Servicing Debt in 2019
Nigeria’s rising debt from both local and foreign lenders continues to gulp a larger part of the nation’s budget.
According to a recent report from the Accountant General of the Federation, Nigeria spent a total sum of N2.1 trillion on debt servicing between January and December 2019.
The amount was stated in the 2019 consolidated financial statements of the government but prepared by the office of the AGF.
The N2.1 trillion used in servicing the nation’s debt in 2019 represents 22.24 percent of the 2020 budget of N10.59 trillion approved by the national assembly in December.
Also, the amount is N80 billion below N2.18 trillion projected deficit of 2020, the total amount expected to be financed through foreign and domestic borrowing in the current year.
However, with the crude oil price falling amid rising coronavirus outbreak, slowing global growth and falling foreign reserves, Nigeria’s ability to finance her largest budget ever may be in question.
The budget assumes crude oil production of 2.18 million barrels per day at an oil price of $57, since the beginning of the year the nation has not produced 2.18 mbpd.
According to OPEC, Nigeria’s oil production dropped to 1.57 million barrels per day in December, below Nigeria’s OPEC quota of 1.75mbpd. Indicating that Africa’s largest oil producer is struggling to up production despite expecting to finance 31.35 percent of the 2020 budget through oil revenue.
Nigeria’s total debt rose from N25.7 trillion in March to N26.14 trillion in September 2019 with local debt rising to N17.94 trillion or 68 percent, according to the Debt Management Office.
Sheriffdeen Tella, professor of economics at the Olabisi Onabanjo University, Ogun State, said contrary to the Federal Government, “We have a debt problem because when you have problem with debt servicing, then you have a serious debt problem.”