Nigeria has continued to spend a large chunk of its dwindling revenue to service its growing domestic and foreign. The nation spent N1.17trillion on local and foreign debt servicing in the third quarter of 2022, representing a 27.9% increase compared to N912.7 billion during the previous quarter (Q2 2022). This is according to Nigeria’s debt service report for Q3 2022 released by the Debt Management Office (DMO). A breakdown of the data showed that N820.59 billion was spent on servicing domestic debts, while N346.43 billion was used to service the nation’s foreign debt.
However, Nigeria’s total outstanding debt stock dropped marginally to $101.91billion as at the end of September 2022 from $103.31billion outstanding as of June 2022. The debt stock when computed in local currency, rose to N44.06 trillion compared to N42.85 trillion recorded as of the previous quarter. This is due to the depreciation of the local currency against the US dollar at the official market. The official exchange rate depreciated from N414.72/$1 recorded as of the beginning of the review quarter to close the period at N432.37/$1, according to data from the DMO. Total external debt stock stood at $39.66 billion (N17.15 trillion). According to DMO data Federal Government domestic debt stood at $49.85 billion, an equivalent of N21.55 trillion while that of the 36 States’ domestic debt also stood at $12.41 billion (N5.36 trillion) as of September 2022. Total domestic debt stock was $62.25 billion as of the period under review, which is approximately N26.92 trillion in local currency.
Domestic debt service in Q3 2022 increased by 23.4% compared to N664.73 billion recorded in the previous quarter and represents the highest value on record. Also, external debt service cost surged by 34% from $597.95 million recorded in Q2 2022. Further breakdown showed a sum of N248.72 billion was spent in July, N152.44 billion in August, while N419.42 billion was spent in September 2022 on domestic debt obligations. Also, N94.99 billion was incurred on interest payments on Nigerian Treasury Bills. Additionally, N685.61 billion was spent as interest payments on Federal government bonds. Other breakdown includes N8.3 billion spent on FGN Sukuk Bonds rentals, N426.01 million interest on FGN Savings Bonds, and N6.25 billion and N25 billion interest and principal payments respectively on Treasury bonds. This brings the total domestic interest payments to a sum of N795.59 billion and a principal repayment of N25 billion.
Nigeria continues to borrow to finance its budget deficit as the revenue crisis lingers. According to the Minister of Finance, Zainab Ahmed, FG revenue stood at N4.233 trillion between January and August 2022, while it spent about N3.52 trillion on debt service during the period. An N4.23 trillion aggregate revenue by the federal government means that it underperformed by 36.3% compared to the N6.65 trillion prorated budget for the period. Also, federal retained revenue underperformed by 33.3%, standing at N3.67 trillion in contrast to the N5.49 trillion expected revenue.
