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The cost of servicing Nigeria’s foreign debt has skyrocketed by 107.7%, reaching a staggering N3.8 trillion, far surpassing the projections set out in the 2024 budget for the period between January and August.
This revelation is detailed in the 2025-2027 Medium Term Expenditure Framework and Fiscal Strategy (MTEF & FSP), published by the Budget Office and obtained by Nairametrics.
The 2024 budget had initially forecast foreign debt servicing at N1.83 trillion, yet the actual expenditure soared to N3.8 trillion, marking a hefty N1.97 trillion increase.
In contrast, domestic debt servicing slightly exceeded expectations, surpassing projections by just 2%. While the budget allocated N3.53 trillion for domestic debt servicing, the actual spending stood at N3.6 trillion, reflecting a modest N71 billion difference.
The total amount allocated for debt servicing during the period, covering domestic and foreign debt, sinking funds, and interest on FGN bonds for securitized ways and means, amounted to N7.41 trillion. However, the government has so far paid N5.51 trillion, which represents 34.4% of the total budgeted amount. This underscores the mounting pressure on public finances, with debt servicing continuing to consume a significant share of government expenditure.
The report reveals that by August 2024, the Federal Government of Nigeria (FGN) had generated N12.74 trillion in retained revenue, achieving 73.8% of its targeted N17.25 trillion for the year. The shortfall can be attributed mainly to the delayed implementation of the expected windfall tax, which has yet to materialize.
On a positive note, the report highlights a strong performance in non-oil revenues, which totaled N3.81 trillion—an impressive 160.1% of the target. This growth helped mitigate the shortfall in oil revenues, which contributed just N4.09 billion, falling short at 75% of the projected figure.
In addition, Corporate Income Tax (CIT) and Value Added Tax (VAT) collections delivered exceptional results. CIT generated N1.71 trillion, exceeding its target by 74.5%, while VAT contributed N530.41 billion, surpassing expectations by 55.1%.
The report also shows that Customs revenues reached N969.89 billion, achieving 95% of the target, driven by increased trade activity and improved efficiency in collection systems. Other revenue streams contributed N4.83 trillion, with independent revenue accounting for N2.3 trillion, further supporting the government’s finances.
Despite these gains, the report emphasizes that oil revenues underperformed due to persistent challenges in the sector, including price volatility and production constraints.
However, the rise in Nigeria’s foreign debt servicing costs highlights growing fiscal challenges with potentially significant consequences for the economy.
This year, Nigeria’s public debt has grown due to various factors, including the depreciation of the naira and increased domestic borrowing, often at higher interest rates.
The country’s debt-to-GDP ratio exceeded 50% for the first time by the end of March 2024, following the release of revised GDP figures.
The depreciation of the naira has substantially increased the cost of servicing external debts, which are paid in foreign currencies, further straining public finances.
