Nigeria’s federal government has spent $1.302 billion on debt servicing in the first half of 2021 (January to June 2021), expending 97 percent of its revenue on debt.
According to a report from Debt Management Office (DMO), in 2020, out of the federal government’s total revenue of N3.42 trillion, N3.34 trillion was used for debt servicing.
Data from the DMO also shows that, in the first quarter of the year (Q1), the country spent $1.003 billion to service debt and an additional $298.96 million to service debt in the second quarter of the year (Q2), which amount to $1.302 billion in the last six months.
Payments on commercial debts accounted for 53 percent, while multilateral and bilateral obligations accounted for 35 and 13 percent of the payments, respectively, in the second quarter of 2021.
A total of $157.012 million was paid out to service eurobond debts, while $38.22 million was paid on bilateral loans, and another $103.73 million was paid on multilateral obligations.
Further analysis of the data shows that Nigeria remitted $75.57 million to the International Development Association (IDA), an arm of the World Bank, and $16.83 million was also paid to Asian Development Bank (ADB).
On the bilateral payment, $24.75 million was paid out to service the country’s obligations with the French Development Agency (AFD) and $12.99 million was paid to German state-owned investment and development bank, KfW Group.
In servicing the commercial loans, the country paid $148.57 million to investors with $57.187 million paid on the 7.625 percent eurobond 2047, $48.750 million paid on the 6.5 percent eurobond 2027 and $42.637 million paid on the 7.625 percent eurobond 2025 papers.
Further analysis also shows that the debt servicing payment for the second quarter of the year is much lower than $1.003 billion which the country paid in the first three months
It shows that in the first quarter of the year, Eurobonds accounted for 76 per cent of the external debt servicing payment with $763.036 million, which was higher when compared to the second quarter of the year.
Multilateral payments accounted for 13 per cent of the total figure at $134.044 million, while bilateral accounted for 11 percent of the total figure at $106.33 million.
The Nigerian Economic Summit Group (NESG) had earlier warned that the federal government’s debt service to revenue ratio is unsustainably high and affects its ability to meet non-debt obligations.
NESG noted that the ratio “remains unsustainably high and undermines the ability of government to meet non-debt obligations such as the provision of infrastructure, human capital development and protection for our nation’s large population of vulnerable people.”