The Federal Government has disclosed that it pays $1.12 billion to service foreign debts in the first quarter of 2024 alone.
This amount shows the escalating burden of external debt on the nation’s fiscal health.
Data gleaned from the international payment segment of the Central Bank of Nigeria website reveals a steady upward trajectory in debt service payments, both over the past few years and within the first quarter of 2024.
When this is compared to the same period in 2023, debt servicing rose by 39.7 percent in Q1, 2024.
The breakdown of the debt service payments paints a picture of fluctuating yet consistently high expenditure.
January 2024 commenced with an imposing debt servicing obligation of $560.52 million, a stark contrast to the $112.35 million recorded in January 2023.
While February 2024 witnessed a moderation in debt servicing payments to $283.22 million and March 2024 saw a further decrease to $276.17 million.
Alarmingly, approximately 70 percent of Nigeria’s dollar payments were allocated to service external debts during the first quarter of 2024.
Out of the total outflows amounting to $1.61 billion, a substantial $1.12 billion was directed towards debt servicing, significantly surpassing the corresponding figure of 49 percent in Q1 2023.
The depletion of foreign exchange reserves, which experienced a recent one-month dip streak has been attributed primarily to debt repayments and other financial obligations rather than efforts to defend the naira, according to CBN Governor Yemi Cardoso.
The World Bank has expressed profound concern over the escalating debt service burdens facing developing countries globally, emphasizing the urgent need for coordinated action to avert a widespread financial crisis.
With record-level debt and soaring interest rates, many developing nations, including Nigeria, face an increasingly precarious economic path, fraught with challenges regarding resource allocation and financial stability.
The Debt Management Office (DMO) has previously disclosed that Nigeria incurred a debt service of $3.5 billion for its external loans in 2023, marking a 55 percent increase from the previous year.
This worrisome trend underscores the pressing need for robust fiscal management and prudent debt repayment strategies to safeguard Nigeria’s financial stability and foster sustainable economic growth.
