The Federal Government of Nigeria has reported a staggering $3.58 billion spent on servicing foreign debt in the first nine months of 2024, marking a significant increase of 39.77% from the $2.56 billion allocated during the same period in 2023.
This data, sourced from the Central Bank of Nigeria (CBN), underscores the escalating pressure on the nation’s fiscal balance amid ongoing economic challenges.
Notably, May 2024 saw the highest monthly debt servicing payment at $854.37 million, a sharp rise compared to July 2023's peak of $641.70 million.
A closer examination of the monthly data reveals significant fluctuations in debt servicing costs throughout 2024. January experienced a staggering 398.89% surge, with payments jumping to $560.52 million from just $112.35 million in January 2023.
February saw a slight reduction of 1.84%, while March recorded a notable decline of 31.04%. April, however, rebounded with a 131.77% increase compared to the previous year.
The trend continued in May, where the $854.37 million spent represented a dramatic 286.52% increase from $221.05 million in May 2023. Following this peak, June saw a decrease to $50.82 million, while July recorded a slight reduction to $542.50 million from July 2023's figure.
As September approached, payments rose again by 17.49%, reaching $515.81 million compared to $439.06 million in September 2023. These figures raise serious concerns about Nigeria's mounting foreign debt obligations, particularly as global interest rates rise and exchange rate fluctuations contribute to increasing costs.
Fitch Ratings has projected that Nigeria's external debt servicing will escalate to $5.2 billion by next year, despite government efforts to prioritize domestic borrowing from capital markets.
The agency also noted that approximately 30% of Nigeria’s external reserves comprise foreign exchange bank swaps.
