Victor EzejaThe Central Bank of Nigeria (CBN) has revealed that the Federal Government spent $1.12 billion on foreign debt service in the first quarter (Q1) of 2024.
According to data from the CBN, Nigeria recorded a total of $1.61 billion in outflows in Q1 2024 out of which a significant $1.12 billion was for servicing external debt.
According to Debt Management Office (DMO) data, Nigeria’s debt service payments have been on a steady increase in the past few years.
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DMO data had revealed that the country spent $3.5 billion on external debt service in the whole of 2023 reflecting a 55 per cent increase from the $2.6 billion spent in 2022 on the same purpose.
Analysis of the latest data obtained from the international payment segment of the Central Bank of Nigeria website indicated that it grew by 39.7 per cent to $1.12 billion in Q1 2024 from $801.36 million in Q1 2023.
Looking at the data on monthly basis, the record shows that the sum of $560.52 million went for debt service in January, $283.22 million February, and $276.17 million in March 2024.
This reflects growing burden of debt service on the country’s finances as it also impacts on the foreign exchange reserves.
Nigeria’s foreign reserves dropped from $34.44 billion to $32.29 billion on April 15 which is $2.15 billion or 6.26 per cent decline, becoming the lowest in over six years.
Analysts had attributed the foreign reserves drop to CBN’s intervention in the exchange rate market in a bid to crash the FX rate.
However, the CBN governor Olayemi Cardoso, said the drop was due to debt repayments and other standard financial obligations, not the bank’s intervention to stabilize the naira.
Currently, Nigeria’s total public debt stands at N97.34 trillion ($108bn) as of the fourth quarter of 2023, according to DMO.
Nigeria and many other developing countries continue are grappling with debt burden.
Victor Ezeja is a passionate journalist with six years of experience writing on economy, politics and energy. He holds a Masters degree in Mass Communication.
