Multilateral Loans Dominate Nigeria’s Debt Service, Totaling $634.3 Million

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  • Nigeria’s Public Debt Surges to N121.67 Trillion in Q1 2024
  • Debt Service Costs Reach $1.12 Billion Amid Rising Interest Rates
  • IMF Payments Account for 37% of Nigeria’s External Debt Service
  • Nigeria Secures $4.95 Billion in World Bank Loans Amid Fiscal Challenges

Nigeria’s fiscal landscape continues to grapple with escalating debt service costs, exacerbated by a recent surge in public debt and rising interest rates, according to the latest report from the Debt Management Office (DMO).

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In the first quarter of 2024, Nigeria’s total public debt surged to N121.67 trillion, marking a significant increase from N97.34 trillion in the previous quarter. This rise is attributed to a combination of Naira depreciation and aggressive borrowing by federal and state governments.

The spotlight this week shifts to the burgeoning debt service expenditures, which reached $1.12 billion by the end of the first quarter. The escalation is driven by higher interest rates and the devaluation of the Naira against the dollar, posing substantial challenges to fiscal sustainability.

Analysis reveals that multilateral loans account for 57% ($634.3 million) of the total debt service costs, followed by bilateral loans at 18% ($197.4 million) and commercial loans at 26% ($288.2 million). Notably, payments to international bodies like the International Monetary Fund (IMF) totaled $409.4 million, constituting 37% of the external debt service for the period. Eurobond repayments contributed 25%, amounting to $282.6 million.

Over the past year, Nigeria secured $4.95 billion in loans from the World Bank, despite concerns over the sustainability of servicing its external debt. Additional loan approvals worth $4.4 billion are anticipated from international lenders and the African Development Bank in the coming year, largely for infrastructure and economic reform projects.

Domestically, the Federal Government’s debt service costs totaled N989 billion, driven by a domestic debt stock of N61.6 trillion. Notably, interest payments on federal bonds accounted for over 80% of the total domestic debt service cost, amounting to N797 billion. Nigerian Treasury Bills (NTBs) and principal repayments on promissory notes also contributed significantly to the overall domestic debt obligations.

Looking ahead, analysts foresee continued pressure on Nigeria’s fiscal framework, with debt service costs expected to strain government revenues. The ongoing tight monetary policy by the Central Bank of Nigeria, aimed at stabilizing the economy, is likely to maintain the high-interest rate environment, further challenging debt sustainability efforts.

In response to funding needs, Nigeria plans to raise approximately N3 trillion from subsequent FGN Bond issuances in 2024, part of a broader strategy to meet its budgetary borrowing targets amid persistent economic challenges.

Godwin Okafor, The Naija247news
Godwin Okafor, The Naija247newshttps://naija247news.com
Godwin Okafor is a veteran Financial Journalist, Internet Social Entrepreneur, and the visionary Founder of Naija247news Media Limited. With an extensive career spanning over 16 years in financial journalism, Godwin possesses a wealth of experience that seamlessly bridges both traditional and digital media landscapes. His journey in journalism commenced at Business Day, Nigeria, where he laid the foundation for his prolific career. In 2010, Godwin took a bold step by founding Naija247news Media, a platform that has since become a prominent player in delivering timely and accurate news. Educationally, Godwin Okafor holds a Bachelor's degree in Industrial Relations and Personnel Management from the prestigious Lagos State University, Ojo, Lagos. His commitment to continuous learning led him to the Lagos Business School, where he further honed his skills. Additionally, he is recognized as a Fellow of the University of Pennsylvania, having successfully completed the Wharton Seminar for Business Journalists. Throughout his illustrious career, Godwin has earned acclaim by winning numerous journalism awards, a testament to his dedication to excellence in reporting. Beyond his role as a Financial Journalist, Godwin Okafor wears the hat of the Chairman at Emmerich Resources Limited, the publishing entity behind Naija247news. His visionary leadership has played a pivotal role in shaping the media landscape and establishing Naija247news as a trusted source of information. Godwin Okafor's multifaceted expertise, commitment to journalistic integrity, and leadership in the realm of business journalism underscore his influential presence in both the media and entrepreneurial spheres.

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