The Federal Government (FG) raised its domestic and foreign borrowing requirement by 15 per cent to fund a record budget deficit, piling pressure on the debt-servicing burden in Africa’s biggest economy.
The Senate on Wednesday agreed to N8.4 trillion ($19 billion) of new loans for 2023 to help fund an estimated budget shortfall of N10.5 trillion. Projected borrowing this year is N7.3 trillion.
President Muhammadu Buhari is scheduled to announce the government’s 2023 spending plans on Friday. Finance Minister Zainab Ahmed in July presented a proposal to spend N19.8 trillion next year, compared with N17 trillion in 2022.
The new loans will add to Nigeria rising debt-service costs, which already exceeded revenue in the first four months of this year and could reach 102 per cent of government income by end of 2022, according to the World Bank. Yields on the OPEC+ member’s longest-tenured 2049 bond having risen by more than 500 basis points since the start of the year to trade at 13.98 per cent on Wednesday.
The Senate approved N6.3 trillion for debt servicing in 2023, up from N3.7 trillion this year.
Nigeria has missed its revenue targets in recent years as rampant theft of crude reduced output to a record low in Africa’s biggest producer. The government achieved only 39 per cent of its targeted oil income in the four months through April, according to the nation’s budget office. High fuel-subsidy costs, which the office estimates will total N6.7 trillion next year, are also depriving the country of much needed income.
