…State Debt Soars to N11.47 Trillion, Fuelled by Currency Devaluation
The Federal Government of Nigeria spent $3.58 billion on foreign debt servicing from January to September 2024, reflecting a 39.77 per cent increase from the $2.56 billion spent in the same period in 2023, according to data from the Central Bank of Nigeria, CBN.
The CBN’s report on international payment statistics indicates that the highest monthly debt servicing expenditure in 2024 was recorded in May, amounting to $854.37 million, while the peak in 2023 was $641.70 million in July.
Further analysis reveals that debt servicing costs surged by 398.89 per cent in January 2024, increasing to $560.52 million from $112.35 million in January 2023. February saw a slight 1.84 per cent decline, with payments reducing from $288.54 million in 2023 to $283.22 million in 2024.
By March, payments fell by 31.04 per cent to $276.17 million compared to $400.47 million in March 2023. However, April saw a 131.77 per cent rise, with $215.20 million paid in 2024, compared to $92.85 million in 2023. The trend peaked in May, with a 286.52 per cent rise, and declined by 6.51 per cent in June to $50.82 million.
Debt payments in July recorded a further decline of 15.48 per cent, with payments reducing to $542.5 million from $641.6 million in July 2023. In August, debt servicing decreased by 9.69 per cent, as $279.9 million was paid compared to $309.9 million the previous year. However, September 2024 saw an increase of 17.49 per cent, with payments rising to $515.81 million from $439.06 million in September 2023.
In addition, the total debt for Nigeria’s 36 states increased to N11.47 trillion by 30th June 2024, a 14.57 per cent increase from the N10.01 trillion recorded in December 2023, despite allocations by the Federal Accounts Allocation Committee, FAAC, and each state’s internally generated revenue.
External debt for states and the Federal Capital Territory rose from $4.61 billion to $4.89 billion, with naira-denominated debt climbing by 73.46 per cent, from N4.15 trillion to N7.2 trillion, due to currency devaluation from N899.39/$1 in December 2023 to N1,470.19/$1 by mid-2024. However, domestic debt for states declined from N5.86 trillion to N4.27 trillion.
Sub-national governments continued to rely heavily on borrowing to finance their 2023 budgets, with the total debt stock of the 36 states rising by 38.1 per cent from N7.25 trillion in 2022 to N10.01 trillion.
BudgIT’s 2024 State of States report, released last week, noted a N606.12 billion increase in domestic debt, resulting in an average yearly growth rate of 11.4 per cent by 31st December 2023.
The report noted that “32 states relied on FAAC receipts for at least 55 per cent of their total revenue, while 14 states relied on FAAC receipts for at least 70 per cent of their total revenue.”
It added that “the over-reliance of state governments on federally distributable revenue accentuates their vulnerability to crude oil-induced and other external shocks.”
In 2023, the revenue of all 36 states rose by 31.2 per cent to N8.66 trillion, with Lagos State accounting for 14.32 per cent of this total.
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