The Federal Government of Nigeria surpassed its debt service budget for 2023 by N869.38 billion in the first nine months of the year, according to information from the presentation of the 2024 executive budget proposal by Minister of Budget and Economic Planning, Abubakar Atiku Bagudu.
The government had initially planned to spend N6.56 trillion on debt servicing in 2023, and it was expected that by September, about N4.92 trillion would have been spent. However, the actual spending during the period was N5.79 trillion, indicating an excess of N869.38 billion or a 17.7% overshoot.
Here’s a breakdown of the debt service costs for January to September 2023:
- Total Debt Service: N6.56 trillion (Budget) / N4.92 trillion (Pro Rate Jan-Sept) / N5.79 trillion (Actual Jan-Sept) / Difference: (N869.38 billion) / Difference %: -17.7%
- Domestic Debt Service: N3.3 trillion (Budget) / N2.47 trillion (Pro Rate Jan-Sept) / N2.9 trillion (Actual Jan-Sept) / Difference: (N430.27 billion) / Difference %: -17.4%
- Foreign Debt Service: N1.81 trillion (Budget) / N1.36 trillion (Pro Rate Jan-Sept) / N1.19 trillion (Actual Jan-Sept) / Difference: N171.75 billion / Difference %: 12.7%
- Sinking Fund: N247.73 billion (Budget) / N185.79 billion (Pro Rate Jan-Sept) / N185.79 billion (Actual Jan-Sept) / Difference: N/A / Difference %: 100%
- Interest on Ways & Means: N1.2 trillion (Budget) / N900 billion (Pro Rate Jan-Sept) / N1.7 trillion (Actual Jan-Sept) / Difference: (N796.65 billion) / Difference %: -88.5%
Despite the significant spending on debt servicing, the capital budget spending fell short, with only N1.47 trillion spent on capital expenditure, which is nearly four times less than the amount spent on debt servicing. This indicates a 75.3% shortfall in capital spending.
The Federal Government utilized approximately 66.93% of its revenue for debt servicing within the first nine months of 2023, an improvement from previous periods when debt service accounted for over 90% of government revenue. The increase in revenue was attributed to policy reforms such as fuel subsidy removal and forex unification.
It’s noted that the Debt Management Office (DMO) expressed concern about the projected 73.5% government debt service-to-revenue ratio in 2023, emphasizing that the current revenue structure might not sustain increased borrowing levels. The International Monetary Fund (IMF) and the World Bank have also provided forecasts highlighting challenges in debt servicing.
President Bola Tinubu commented on the need to address the situation, stating that the country cannot continue servicing its debt with 90% of its revenue, as it would lead to destruction.
