Nigeria’s external debt servicing costs have surged by 38% in the first nine months of 2024, reaching a whopping $3.53 billion. This significant increase has raised concerns about the country’s growing debt obligations and the potential consequences for its economy.
According to the Central Bank of Nigeria’s (CBN) International Payment Data, the country spent $3.53 billion on external debt servicing between January and September 2024, compared to $2.56 billion during the same period in 2023. This represents a $970 million increase, highlighting the intensifying fiscal pressures facing Nigeria’s economy.
A month-by-month analysis reveals the scale of the challenge. In January 2024, Nigeria spent $560.52 million on external debt servicing, marking a sharp increase from $112.35 million in January 2023. May 2024 saw the highest monthly expenditure of $854.37 million, a staggering 287% jump from $221.05 million in May 2023.
The cumulative figures paint a stark picture of Nigeria’s debt burden. The country’s external debt stock is projected to reach $45.1 billion by the end of 2024, with the Federal Government approving $2.2 billion in new external borrowing to fund the 2024 Appropriation Act.
Experts have raised concerns about the sustainability of Nigeria’s growing debt obligations. Tilewa Adebajo, Chief Executive of CFG Advisory, noted that “the debt profile is too high and unsustainable. The federal government must implement policies to grow the economy and create employment to address these challenges effectively.
The increasing debt servicing burden has significant implications for Nigeria’s economy. With dwindling revenues, inflationary pressures, and currency depreciation, the country is facing intensifying fiscal pressures. The rising debt servicing costs will further exacerbate these challenges, potentially leading to a vicious cycle of debt.
To mitigate these risks, the Federal Government must implement policies to grow the economy, create employment, and reduce the country’s reliance on external borrowing. This may involve diversifying the economy, promoting local production, and implementing fiscal discipline.
In conclusion, Nigeria’s debt servicing burden is a ticking time bomb that requires immediate attention.
The government must take proactive steps to address the country’s growing debt obligations and implement policies to promote sustainable economic growth. Failure to do so may have severe consequences for Nigeria’s economy and its citizens.
