According to the latest update released by the debt management office, Nigeria’s public debt is now N41 trillion as at March, 2022.The country’s debt stood at N39.556 trillion in December, 2021. The new figures mean that another N2.048 trillion has been added to the country’s debt in the three-month period between December 2021 and March 2022.
Everyday in Q1 2022, Nigeria Spent an Average of N9.94 billion on Debt Service
Rising debt burden and increased debt servicing amounts are inseparable siamese twins. In 2021 alone, a Dataphyte analysis showed that Nigeria spent a sum of N2.8 trillion on debt servicing.
Everyday of the last three months, Nigeria has spent an average of N9.94 billion daily on debt service.
Combined, the cost of debt servicing in Q1 2022 alone is N895 billion which is already 32% of the total debt servicing figure for 2021.
If the debt servicing figures remain the same through each quarter of 2022, the total debt servicing bill at the end of the year will be N3.580 trillion, 25% higher than the bill for 2021.
Breakdown of Nigeria’s Q1 2022 Debt Service
Details released by the debt management office revealed that between January and March 2022, Nigeria has spent N668,685,710,112.98 on servicing domestic debt. The domestic loans service was broken down as N188.364 billion in January, N103.883 billion in February and N376.437 billion in March. This Q1 2022 debt servicing bill is 215% higher than the figures for Q4 2021.
The country has also spent $548,789,178.51 on external loans servicing. The Q1 2022 figure is an unbelievable 1,900 times higher than Q4 2021 figures. This astronomical increase of foreign debt service figures in Q1 2022 is the highest in at least each quarter of the last 12 years.
Debt Servicing Vs States and a Few Sectors
The amount spent on debt servicing in Q1 2022 alone ( N895 billion) is more than the 2022 budget of each state in Nigeria with the exception of Lagos.
The total allocation to the Health sector in the 2022 budget is N724 billion, 23.6% lesser than the bill for servicing Nigeria’s debts in Q1 2022.
The debt servicing bill for the last quarter is 93.6% of the total allocation to the Education sector in the 2022 budget which is N923.7 billion. Infact, the debt servicing figure is 68% of the total revitalisation fund at the centre of disagreements between Lecturers and the Federal government.
The debt servicing figure is 66% of Nigeria’s 2022 Defence budget which is N1.2 trillion naira.
The budget of Nigeria’s challenged Power Sector, with 5 national grid collapses in the 6 months since the start of 2022 is N306 billion naira and its 65% lesser than the cost of servicing debts in Q1 of 2022.
Allocation to the Agricultural Sector, touted as Nigeria’s post-oil economy saviour, is N215.8 billion and it is 79% lesser than debt servicing costs for the first quarter of 2022.
The country plans to spend 22% of its 2022 budget on debt servicing, which amounts to N3.74 Trillion. The Q1 2022 servicing bill is already 24% of that figure. The International Monetary Fund had warned that Nigeria may spend all of its 2022 revenue, pegged at N10.74 Trillion, on debt servicing and the first quarter debt servicing bill represents 8.95% of total projected revenue for 2022.
Nigeria May Exceed its MTEF Borrowing Projections
Nigeria’s increasing debt profile continues to be a subject of concern. At the current rate, borrowings for 2022, as seen in the first three months may put Nigeria at the risk of going beyond its projected borrowings for 2022 in its Medium Term Expenditure Framework (MTEF).
According to the MTEF document, the country plans to borrow N4.89 trillion in 2022, with N2.44 trillion domestic borrowings and N2.44 trillion external loans.
With the sum of N2.048 trillion borrowed within the first three months of the year, comprising domestic borrowings amounting to N1.28 trillion and external borrowings which stood at N762 billion. The current debt figure shows that Nigeria has expended 41.88% of its debt target for the 2022 fiscal year between January and March.
According to the MTEF plan, Nigeria can only borrow another N2.842 trillion, N1.16 trillion domestic borrowings and N1.678 trillion external borrowings. By implication, the country has only 58.12% of its debt target to spread over the next nine months (April to December).
Experts have warned that the country needs to tone down its fervour for loans to reduce its effects on infrastructure needs and ensure better governance returns for the revenue made in the country.