Nigeria’s Foreign Debt Service Amassed to $1.12billion in Q1 of 2024
The data from the Central Bank of Nigeria (CBN) International Payments reveals that Nigeria allocated $1.12 billion towards foreign debt service payments in the first quarter of 2024. This represents a significant increase of 39.8 percent ($318.54 million) compared to the $801.36 million recorded in Q1 2023.
It is important to note that Nigeria’s foreign debt service reached $3.5 billion by the end of 2023, marking a 55% increase from the $2.6 billion incurred in 2022. Additionally, the country’s external debt profile rose by 1.43% from $41.69 billion in 2022 to $42.29 billion in 2023. The surge in foreign debt service payments can be attributed to the high debt level and borrowing costs.
Despite the recent adoption of domestic borrowings, which now account for a larger portion of the total public debt, Nigeria has accumulated a substantial amount of foreign debt to finance its budget deficit over the years. Consequently, this decision has led to a significant portion of the country’s reserves and foreign exchange earnings being utilized for servicing external debts.
In Q1 2024, 70% of the CBN’s total foreign payments amounting to $1.61 billion were allocated towards servicing external debts, marking a 49% increase from the previous year (Q1 2023). In order to alleviate the burden of high debt servicing, it is imperative to control borrowing and enhance revenue generation. Furthermore, the government should prioritize transparency and implement fiscal discipline strategies to ensure the prudent utilization of public resources.
