Central Bank of Nigeria has said that the Federal Government spent $1 billion on debt services and payments between January and March 2021.
According to the apex bank’s international payments data, about $617.5million was spent on debt services and payments in January, while $213.3million and $172.59million was spent by the Federal Government on debt services and payments between January and March 2021 respectively.
However, debt service obligations in the reporting period amounted to N797.41 billion, compared with N416.43 billion and N752.37 billion in 2020 Q2 and 2019 Q3, respectively.
Market pundits said the global outlook remained uncertain due to rising global debt levels, lockdown measures, and sluggish global trade, stressing that the roll-out of the COVID-19 vaccines and continued implementation of monetary, fiscal, and structural policies tends to strengthen global growth prospect.
They noted that the government is meant to pay back loans borrowed from Exim Bank of China, International Monetary Fund, among others.
The CBN in its economy report for January said, debt service obligations in the reporting period, amounted to N797.41 billion, compared with N416.43 billion and N752.37 billion in 2020Q2 and 2019Q3, respectively.
According to them, the increase was due largely to the maturity of FGN bonds, Eurobonds, and loans from Exim Bank of China, adding that the depreciation of the naira exchange rate also contributed to the rising debt service payments during the review period.
A member of the Monetary Policy Committee of the CBN, Robert Asogwa, with the African Development Bank, in a statement said a broader concern however, is the high level of public debt which was key issue raised in the January 2021 MPC meeting with debt service burdens now at or above the levels during the last global financial crisis.
The apex bank said, Nigeria spent a total of $9.76billion on debt services between 2015 and 2020. The breakdown of the figures showed that $1.3billion was spent on debt services in 2019, as against $5.77billion spent in 2020.
According to the CBN, $1.47billion was spent in 2018 as against $444.77million in 2017, while $349.6million and $378.91million was spent between 2016 and 2015 respectively.
Debt services in the country continued to soar amid Federal Government borrowing to support the budget. The breakdown of the data revealed that the government spent $199.76 million, the highest amount on debt service in 2019, while in 2020, $4.43billion was the highlighted amount spent on debt service in 2020.
Analysts have continued to stress that while the country’s debt to Gross Domestic Product ratio is sustainable for now, the cost of servicing the debt eats deep into the country’s already depleting revenue.
Market commentators have complained about the government’s penchant for debts, believing that it could put the future of younger Nigerians in jeopardy.
The Deputy Governor, Financial System Stability, CBN, Mrs. Aisha Ahmad, stated that, “Low oil prices, muted fiscal revenues and significant debt service obligations have dramatically restricted the already fragile fiscal space.”
“Further fiscal adjustments will be required to curtail rising public debt and budget deficit, in addition to prioritization of government spending to support the Economic Sustainability Plan,” she added.