Buhari’s Government Spent 85.37% of Its Revenue on Debt Servicing in February, Tinubu Inherits N77.8trn Debt
- In February 2023, the Nigerian government under former President Muhammadu Buhari spent a substantial part of its revenue on debt servicing
- The Nigerian government spent more than 85% of its revenue servicing debt in the month under review
- The Central Bank of Nigeria said that the federal government had retained revenue of N478.57 billion in February
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The Nigerian government spent over 85% of its revenue servicing debt in February 2023.
The Central Bank of Nigeria said in its monthly economic report for February that the federal government had a retained revenue of N478.57 billion in February.
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Nigeria's debt servicing balloons
The apex bank also stated that the Federal Government spent N408.5bn on debt servicing in the same month.
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The Punch says the report also revealed that Nigeria recorded a fiscal deficit of N614.05 billion in February 2023.
The report further showed that the country recorded a fiscal deficit of N513.05bn in February.
The report read:
“The estimated fiscal deficit of the FGN expanded in February due to a drop in the retained revenue. At N513.05 billion, the provisional fiscal deficit of the FGN rose by 22.8 per cent relative to the preceding month. However, it was 16.2 per cent below the budget benchmark.”
Recently, the International Monetary Fund (IMF) said that the Nigerian government planned to 82% of its income on interest payments in 2023.
IMF, World Bank projects Nigeria's debt servicing ratios
Per the IMF, the external debt will increase to $121.6 billion, with external reserves growing to $37.5 billion.
The IMF revealed this in a table of forecasts by the IMF Executive Board Concludes 2022 Article IV Consultation with Nigeria Summary.
The forecasts indicate an improvement in the share of Nigeria’s revenue used as interest payment, with interest payments declining from 96.3% in 2022 to 82% in 2023.
Also, the interest payment was about 86.1% and 87.8% of Nigeria’s revenue in 2022 and 2021, respectively.
The World Bank, on the other hand, projected that debt servicing would consume 123.4% of Nigeria’s government in 2023.
World Bank’s Lead Economist for Nigeria, Alex Sienaert, disclosed the information in November 2022.
He said:
“Borrowing more is not the solution: debt costs are rising rapidly, squeezing non-interest spending.
“Debt servicing has surged over the past decade and is expected to continue increasing over the medium-term, crowding out productive spending.”
BusinessDay quotes KPMG saying that Nigeria expects to borrow N8.8 trillion from domestic and external means this year by both states and the federal government. Nigeria's total debt stock may hit about N77.8 trillion in 2023.
Nigeria’s debt service gulps N3.04 trillion as total debt stock hit N44.06 trillion
Legit.ng reported that the Nigerian government borrowed about N1.22 trillion between September and December 2022, bringing the country’s total debt stock to N44.06 trillion.
With the current debt stock of N44.06 trillion recorded as of September 2022, Nigeria has spent N3.04 trillion to service external debts in nine months of this year, representing a spike of 23.4 per cent Year-on-Year from N2.46 trillion reported in nine months, data from the Debt Management Office (DMO) says.
An examination of the N3.04 trillion debt service payments shows that the federal government used a total of N2.15 trillion to service domestic debts in nine months.
Source: Legit.ng
