In Q3 2023, Nigeria witnessed a 74% year-on-year surge in its total external debt service payments, reaching nearly $1.4 billion, as reported by the Debt Management Office (DMO).
The breakdown reveals $952 million in market debt and $438 million in non-market debt. Stakeholders emphasize the weight of this debt burden, considering the Federal Government’s limited fiscal space, marked by reduced oil production and the fluctuating naira exchange rate, posing significant risks to external debt obligations.
The significant year-on-year surge in total debt service costs stems from redeeming the $500 million July 2023 Eurobond and repaying $269 million to multilateral and bilateral lenders. Notably, debt service payments peak in Q1 and Q3, aligning with concentrated FGN bond issuances during these quarters.
For the first nine months of ’23, the FGN’s external debt service payments reached almost $2.7 billion, a 22% y/y increase, with $1.6 billion and $1.0 billion in market and non-market debt payments, respectively.
The 2024 budget highlights a nine-month 2023 external debt service cost of N1.2 trillion, constituting approximately 21% of the overall debt service cost. The external debt service-to-revenue ratio stands at about 13.7%.
Excluding principal repayments, interest and fee payments in Q3 ’23 totaled $622 million, suggesting an annualized average interest rate of about 5.97%, closely comparable to the 6.0% for the full year 2022.
The external debt service cost is anticipated to stay in single digits, given that 63% of the total external debt stock comprises concessional loans from multilateral and bilateral lenders. However, records indicate a potential escalation of the external debt service burden in local currency terms, driven by the naira’s downward pressure, posing a threat to the nation’s fiscal robustness and economic stability.
…………
Note : To submit Press Releases, Statements, and Advert Inquiries for publication on Waffi blog (website) or Television 📺, please use the following contact details: You can send an email to info@waffitv.com or reach us via Whatsapp at 07068286500
