Nigeria in the past 10 years has spent a whopping sum of N15.22trillion to service its domestic and external debts, data gathered on the official website of Debt Management Office (DMO) has revealed.
Analysis of the DMO numbers showed that domestic debt service contributed 88.7per cent or N13.5trillion, while external debt interest/service contributed 11.35 per cent or N1.73 trillion ($5.3 billion) out of the N15.1trillion total debt services between 2012 and 2021.
A further check by Economic Confidential revealed that the federal government in 10 years has consistently paid interest on its Nigerian Treasury Bills (NTB), FGN Bonds, Sukuk Bonds, Saving Bonds and Nigerian Treasury Bonds, while interest on Multilateral, Eurobond borrowings among others continued to increase steadily.
The DMO data revealed that interest on NTBs and FGN Bonds, two major instruments the government used in borrowing funds to bridge the budget deficit, amounted to N3.4trillion and N9.27trillion in 10 years, respectively.
The external debt interest/service on Multilateral and Eurobond, two major sources the federal government borrowed funds from foreign financial institutions amounted to $940.86million and $3.42billion in the years under consideration.
The multilateral financial institutions FG pays interest/service on loans borrowed are: International Bank for Reconstruction and Development, Africa Dev. Bank, International Fund for Agric. Dev., Africa Dev. Fund, European Dev. Fund, Arab Bank for Economic Development in Africa (BADEA), among others.
A further look at the data showed that FG domestic debt stock by Instrument moved to N19.24trillion as at December 31st, 2021 from N6.54trillion reported by DMO in 2012, while Nigeria’s External Debt Stock closed 2021 at $38.391million from $6.527million in 2012.
It is also worth noting that N2.05trillion and $1.10billion spent on servicing domestic debts and external debts in 2021 were the highest on DMO record.
Barring any change in plans, the FG is to spend a cumulative amount of $10.19billion servicing the nation’s external debt obligation within a 10 years period covering 2021 and 2030, according to DMO.
However, since the cartel decided to increase production, Nigeria has found it difficult to meet its own quota, despite a significant surge in the price of crude oil.
Analysts have raised concerns as the federal government continues to obtain new loans from both local and external sources, despite growing debt profile and servicing cost.
Also speaking, Prof. Hassan Oaikhenan of the Department of Economics, University of Benin maintained that increasing borrowing and debt services have adverse implications on the nation’s economy.
“There is nothing bad in borrowing if its essence was used to finance key projects. If the borrowing was used to finance consumption, that means the borrowing present a deadweight loss to the economy.
On his part, the CEO, Wyoming Capital & Partners, Mr. Tajudeen Olayinka said debt servicing by the federal government over the years has encouraged investors to provide additional support to the government with respect to further investment in government securities.
Commenting on the rising debt profile, the CEO, Centre for the Promotion of Private Enterprise (CPPE), DR Muda Yusuf noted that, “When we take account of borrowings from the CBN and the stock of AMCON debt, the debt profile would be in excess of N60 trillion. Although government tends to argue that the conditions was not a debt problem, but a revenue challenge. But debt becomes a problem if the revenue base is not strong enough to service the debt sustainably. It invariably becomes a debt problem and possibly a debt crisis. Government actual revenue can hardly cover the debt service obligations.
