Nigeria Spends $1.12bn on International Debt Servicing in Q1

Nigeria Spends $1.12bn on International Debt Servicing in Q1

The Federal Authorities spent about $1.12bn on international debt service funds within the first quarter of 2024, highlighting the rising burden of exterior debt on the nation’s funds.

Knowledge obtained from the worldwide cost phase of the Central Financial institution of Nigeria web site revealed that debt service funds elevated steadily between January and March and over the previous few years.

In Q1 2023, debt servicing stood at $801.36m, however in Q1 2024, it shot up by 39.7 per cent to $1.12bn.

A month-to-month breakdown of the debt service funds reveals a fluctuating but constantly excessive expenditure sample.

The federal government began 2024 with a big debt servicing obligation of $560.52m in January. This sum alone exceeded the whole debt servicing expenditure of January 2023 ($112.35m) by almost 5 instances, underlining the mounting strain of international debt repayments on the nation’s funds.

In February 2024, the debt servicing funds have been considerably moderated however remained substantial at $283.22m. It’s decrease than January’s large outflow, and February 2023’s debt servicing of $288.54m.

March 2024 continued the pattern however at a decrease determine, with Nigeria expending $276.17m on debt servicing. Whereas this represented a slight lower in comparison with February and a far lesser lower from March 2023’s $400.47bn, it was nonetheless a notable expenditure, additional burdening the nation’s fiscal place.

It was additional noticed that Nigeria spent about 70 per cent of its greenback funds to service exterior money owed between January and March 2024.

Based on knowledge from the Central Financial institution of Nigeria, out of the $1.61bn in whole outflows made throughout this era, a considerable quantity of $1.12bn was directed in direction of servicing exterior debt.

This determine represents a hefty slice of the nation’s monetary sources and signifies a big enhance from the earlier yr when it was 49 per cent in Q1 2023.

Recall that international alternate reserves not too long ago hit a one-month dip streak. The CBN Governor, Yemi Cardoso, stated that the reducing reserves have been primarily attributable to debt repayments and different commonplace monetary obligations, somewhat than efforts to defend the naira.

In an announcement, the World Financial institution expressed deep concern over the escalating debt service prices which can be burdening creating nations worldwide.

The World Financial institution’s Chief Economist, and Senior Vice President, Indermit Gill, emphasised the gravity of the scenario, highlighting the potential for a widespread monetary disaster if instant and coordinated actions should not taken.

Based on Gill, the mix of record-level debt and hovering rates of interest has set many creating nations on a precarious path, one that would result in financial misery and difficult choices concerning the allocation of sources.

The DMO had said that Nigeria incurred a debt service of $3.5bn for its exterior loans in 2023. This was a 55 per cent enhance from the $2.6bn incurred in 2022 as debt service-related funds for the nation’s exterior money owed.