Anxiety as Nigeria’s foreign debt nears $50bn
Nigeria’s external debt is climbing and estimated to rise to $50 billion by the end of the third quarter of 2024.
The Debt Management Office (DMO), which is releasing the latest public debt data, said as of March 31, 2024, Nigeria’s total public debt stock stood at N121.67 trillion ($91.46 billion), with domestic debt at N65.65 trillion ($46.29 billion) and external debt at N56.02 trillion ($42.12 billion).
The country’s external debt is consisfently rising due to a series of loans from the World Bank and other international lenders, including a $2.25 billion loan in June under the Nigeria Reforms for Economic Stabilisation to Enable Transformation (RESET) and the Nigeria Accelerating Resource Mobilization Reforms (ARMOR) programs.
Also, the World Bank approved another $1.57 billion loan for key sectors, including education, healthcare, and water management, with $70 million being a grant.
In the same vein, the African Development Bank (AfDB) approved $500 million in July for the Economic Governance and Energy Transition Support Program (EGET-SP) to accelerate energy infrastructure transformation, while $925 million was secured from Afreximbank in June under the crude oil-backed prepayment facility sponsored by the Nigerian National Petroleum Company Limited (NNPCL).
Nigeria’s rising debt has also led to a significant increase in debt service costs, which in the first seven months of 2024, rose by 53.63%, from $971.47 million to $2.78 billion.
The highest debt service payment at $854.36 million was in May. However, Fitch Ratings has projected that Nigeria’s external debt service cost could reach $5.2 billion by 2025.
This growing debt burden risks Nigeria’s financial stability, especially with increasing global interest rates and economic challenges.