The Central Bank of Nigeria’s international payment figures for the first seven months of 2024 show that Nigeria spent $2.78 billion on servicing its foreign debt.
This sum represents 64% of the official dollar payments totaling $4.36 billion made by Apex Bank on behalf of the Nigerian government between January and July of 2024.
Nigeria spent 46% of its total out-of-country expenditures in the same period last year on debt service; this represents a 39.13% rise in 2024.
The percentage increase indicates that Nigeria’s responsibilities to service its foreign debt have increased dramatically, surpassing the growth in total international payments.
There could be some reasons for this, including an increase in the overall amount of debt, increased interest rates on current debt, or adjustments to payment plans that resulted in a greater need for immediate debt servicing.
What the data indicates
The amount paid for servicing external debt increased to $560.52 million in January 2024, a 399% increase over the $112.35 million recorded in the same month the previous year.
Additionally, it made up 74% of the $757.41 million in total foreign payments made in that same month. Even though it was erratic, this trend held importance as the months went by.
- Debt servicing expenses totaled $283.22 million in February 2024, making up 67% of the $424.96 million in total international payments made in that month. The $288.54 million in debt servicing payments made in the same month of 2023 were reduced by 2% as well.
- March 2024 saw even more declines, coming in at $276.17 million, down 31% from $400.47 million in the same month the previous year. This amount accounted for 65% of the $424.71 million total in international payments.
- Debt servicing payments totaled $215.20 million in April 2024, accounting for 47% of all international payments of $462.54 million. Throughout the year, this was one of the lowest percentages recorded. Nevertheless, compared to the $92.85 million paid in April 2023, there was a notable rise of 132%.
- The largest hike happened in May 2024, when debt servicing reached $854.37 million, up 287% from $221.05 million in the same month the previous year. This increase was a result of a significant rise in the debt stock.
- It is also the month-to-month spending that is highest during that time. This amount amounts to 69% of the total foreign payments made during that month, which totaled $1.24 billion.
- The cost of debt servicing in June 2024 was $50.82 million, a 6% decrease from $54.36 million in June 2023.
- It accounted for barely 14% of the $353.61 million in overseas payments made that month. At the end of the first half of the year, this was the lowest percentage of the year, indicating a brief reprieve from debt commitments.
This respite was once again fleeting, as debt servicing increased to $542.50 million in July 2024, accounting for a significant 78% of the $694.45 million in total overseas payments. When compared to the $641.70 million paid in July 2023, it was a 15% drop.
Nigeria’s overall debt servicing payments for the seven months from January to July of 2024 came to $2.78 billion, a 19% increase over the $1.81 billion spent in the same time the previous year.
This overall increase emphasises the mounting problem of managing Nigeria’s external debt in the face of mounting pressure from the global financial system as well as the mounting weight of debt servicing on the nation’s finances.
What to note
- The News Chronicles previously revealed that Nigeria’s first-quarter 2024 international debt service payments totaled almost $1.12 billion, underscoring the mounting strain that foreign debt is placing on the country’s budget.
- According to the most recent CBN data, by the seventh month of the year, this amount had more than doubled.
- The World Bank released a statement expressing its grave worry over the rising costs of debt service that developing nations around the world are facing. The Chief Economist and Senior Vice President of the World Bank, Indermit Gill, stressed the seriousness of the situation and the possibility of a global financial catastrophe in the absence of prompt and concerted action.
- Gill claims that record-high debt and skyrocketing interest rates have put many developing countries on a perilous financial path that may result in economic hardship and difficult resource allocation decisions.
