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The World Bank has projected that Nigeria’s debt servicing will gulp 123.4 percent of federal government revenue in the first quarter of 2023.
World Bank’s Lead Economist for Nigeria, Alex Sienaert, made it known in a presentation titled ‘Nigeria Public Finance Review: Fiscal Adjustment for Better and Sustainable Development Results.’ for the month of November.
The World Bank also revised its debt servicing projection for 2022, stating that 100.2 per cent of Federal Government revenue would be gulped by debt servicing.
This is below the 102.3 per cent previously projected for the end of 2022 in the World Bank’s Africa’s Pulse report, which is a biannual analysis of the near-term macroeconomic outlook for the region.
In his presentation, Sienaert said debt servicing would not give room for productive spending, so borrowing was not the solution to Nigeria’s problem.
“Borrowing more is not the solution: debt costs are rising rapidly, squeezing non-interest spending,” he said, adding, “Debt servicing has surged over the past decade and is expected to continue increasing over the medium-term, crowding out productive spending.”
READ ALSO: Budget deficit hits over N30trn as debt servicing pressures persist
FG has significantly increased its borrowings, as the World Bank had revealed that in 2021, $9 billion was obtained from International Monetary Fund (IMF) credit and Special Drawing Rights (SDR), against $2.58 billion in 2010.
Recall that the latest debt service report for the third quarter of 2022 data by the Debt Management Office (DMO) showed that N820.59 billion was spent on servicing domestic debts, while N346.43 billion was incurred on foreign debt service costs.
This is an increase of 27.9 per cent compared to the N912.7 billion spent on debt servicing during the second quarter of 2022.
A breakdown of the debt stock showed that total external debt stock stood at $39.66 billion (N17.15 trillion). Federal Government domestic debt stood at $49.85 billion, an equivalent of N21.55 trillion. States’ domestic debt also stood at $12.41 billion (N5.36 trillion) as of September 2022.
Total domestic debt stock was $62.25 billion as of the period under review, which is approximately N26.92 trillion in local currency.
Domestic debt service in the third quarter of 2022 increased by 23.4 per cent compared to N664.73 billion recorded in the previous quarter and represents the highest value on record.
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