The Federal Government has spent about $1.12bn on foreign debt service payments in the first quarter of 2024, highlighting the growing burden of external debt on the nation's economy. Data from the Central Bank of Nigeria (CBN) revealed that debt service payments had risen in the past few years. In Q1 2023, debt servicing stood at $801.36 million, but in Q1 2024, it increased by 39.7 per cent to $1.12 billion. The government began 2024 with a significant debt servicing obligation of $560.52m in January. This sum alone exceeded the entire debt servicing expenditure of January 2023 ($112.35m) by nearly five times, underlining the mounting pressure of foreign debt repayments on the nation’s finances.
In February 2024, the debt servicing payments were in a way moderated but remained substantial at $283.22m. It is lower than January’s massive outflow, and February 2023’s debt servicing of $288.54m.
March 2024 sustained the trend but at a lower figure, with Nigeria expending $276.17m on debt servicing. While this represented a slight decrease compared to February and a far lesser decrease from March 2023’s $400.47bn, it was still a notable expenditure, further burdening the country’s fiscal position.
This shows that 70 per cent of its dollar payments were channeled towards servicing external debts between January and March 2024.
It can be recalled foreign exchange reserves recently hit a one-month dip mark. The CBN Governor, Yemi Cardoso, said that the decreasing reserves were primarily due to debt repayments and other standard financial obligations, rather than efforts to defend the naira.
