President Bola Tinubu has written to the National Assembly (NASS) seeking approval of a fresh N1.767 trillion – equivalent of $2.209 billion – as a new external borrowing plan in the 2024 appropriation act.
If approved, the loan will be used to part-finance the deficit of N9.7trillion in the 2024 budget.
The president’s request was read by the speaker during plenary on Tuesday.
The president has also forwarded the MTEF/ FSP 2025- 2027 to parliament and the National Social Investment Programme establishment amendment bill, to make the social register the primary tool for the implementation of the federal government’s social welfare programmes.
The Central Bank of Nigeria (CBN) revealed recently that the Federal government spent $3.58 billion servicing the country’s foreign debt in the first nine months of 2024.
Data sourced from the Central Bank of Nigeria (CBN) report on international payment statistics showed that the amount represents a 39.77 per cent increase from the $2.56billion spent during the same period in 2023.
According to the report, while the highest monthly debt servicing payment in 2024 occurred in May, amounting to $854.37million, the highest monthly expenditure in 2023 was $641.70million, recorded in July.
The trend in international debt servicing by the CBN highlights the rising cost of debt obligations by Nigeria.
Further breakdown of international debt figures showed that in January 2024, debt servicing costs surged by 398.89 per cent, rising to $560.52million from $112.35million in January 2023. February, however, saw a slight decline of 1.84 per cent, with payments reducing from $288.54million in 2023 to $283.22million in 2024.
March recorded a 31.04 per cent drop in payments, falling to $276.17million from $400.47million in the same period last year. April saw a significant rise of 131.77 per cent, with $215.20million paid in 2024 compared to $92.85million in 2023.
The highest debt servicing payment occurred in May 2024, when $854.37million was spent, reflecting a 286.52 per cent increase compared to $221.05million in May 2023. June, on the other hand, saw a 6.51 per cent decline, with $50.82million paid in 2024, down from $54.36million in 2023.
July 2024 recorded a 15.48 per cent reduction, with payments dropping to $542.50million from $641.70million in July 2023. In August, there was another decline of 9.69 per cent, as $279.95million was paid compared to $309.96million in 2023. However, September 2024 saw a 17.49 per cent increase, with payments rising to $515.81m from $439.06million in the same month last year.
Given rising exchange rates, the data raises concerns about the growing pressure of Nigeria’s foreign debt obligations.
On Monday, Channels Television reported a rise in debts of the 36 states of the federation.
The total debts of the 36 states of the federation rose to N11.47trillion as of June 30, 2024, despite allocations by the Federal Accounts Allocation Committee (FAAC), and their respective internally generated revenues (IGR).
An analysis of data from the public debt reports released by the Debt Management Office (DMO) said the rise was 14.57 per cent higher than the N10.01 trillion recorded in December 2023.
External debt for the states and the Federal Capital Territory also climbed from $4.61billion to $4.89billion within the period under review.
In Naira terms, the debts increased by 73.46 per cent, from N4.15trillion to N7.2trillion, following the devaluation of the naira from N899.39/$1 in December 2023 to N1,470.19/$1 by June 2024.
However, domestic debt for states and the FCT declined from N5.86trillion to N4.27trillion.
In total, states and the FCT accounted for Nigeria’s public debt of N134.3trillion in June 2024, a decrease from their 10.29 per cent share in December 2023, even as their nominal debt levels increased.
Earlier reports said that the sub-national governments continue to grapple with a persistent reliance on borrowing to finance their budgets in 2023, as the total debt stock of the 36 states surged by 38.1%, from N7.25trillion in 2022 to N10.01trillion.
According to BudgIT’s 2024 State of States report released on Tuesday, the debt growth was partly driven by N606.12billion increase in domestic debt, resulting in an average year-on-year growth rate of 11.4% by December 31, 2023. The total domestic debt stood at N5.86trillion.
The situation was further complicated by rising foreign debt, which increased by 4.1%, from $4.43bn in 2022 to $4.61bn in 2023.
According to the report, the liberalisation of the exchange rate exacerbated the financial strain on states, significantly raising their foreign loan repayment obligations in naira terms.
Lagos State remains the most indebted in foreign currency, accounting for 26.9% of the total foreign debt, equivalent to $1.24billion.
The DMO’s report comes after BudgIT’s report said that the 32 states of the federation relied on FAAC for at least 55 per cent of their total revenue in 2023.
According to the 2024 report released last week, the development paints the over-reliance of state governments on federally distributable revenue and accentuates the vulnerability of the state governments to crude oil-induced shocks and other external shocks.
The report further said that 14 states relied on FAAC receipts for at least 70 per cent of their total revenue. Furthermore, transfers to states from the federation account comprised at least 62 per cent of the recurrent revenue of 34 states, except Lagos and Ogun, while 21 states relied on federal transfers for at least 80 per cent of their recurrent revenue.
In the 2023 fiscal year, the combined revenue of all 36 states in Nigeria increased significantly by 31.2 per cent from N6.6tn in 2022 to N8.66trillion.
This growth rate exceeded the previous year’s increase of 28.95 per cent, indicating a notable improvement in fiscal performance.
Of the total revenue generated in 2023, Lagos State contributed N1.24trillion, representing 14.32 per cent of the cumulative revenue of the 36 states.
Gross FAAC, which grew by 33.19 per cent from N4.05trillion in 2022 to N5.4trillion in 2023, contributed to 65 per cent of the year-on-year growth of the combined revenue of the 36 states.
“32 states relied on FAAC receipts for at least 55 per cent of their total revenue, while 14 states relied on FAAC receipts for at least 70 per cent of their total revenue.
“Furthermore, transfers to states from the federation account comprised at least 62 per cent of the recurrent revenue of 34 states, except Lagos and Ogun, while 21 states relied on federal transfers for at least 80 per cent of their recurrent revenue.
“The picture painted above buttresses the over-reliance of the state governments on federally distributable revenue and accentuates their vulnerability to crude oil-induced shocks and other external shocks.”
The report provides a detailed analysis of states’ fiscal sustainability, examining how well they balance internally generated revenue against federal allocations.