So 1 Out Of Every Four Naira Of Nigeria’s Proposed Spending Over Next Three Years To Go Towards Debt Servicing

There have been concerns over the debt servicing portfolio of the country. ..Read Full Article

As concerns continue to mount on Nigeria’s debt profile, a SaharaReporters review of the country’s Medium Term Expenditure Framework (MTEF) has shown that the country plans to spend N29.2 trillion on debt servicing between 2024 and 2026.

The review shows that in 2024, the country plans to service debts with N8.2 trillion, N10 trillion in 2025 and N11 trillion in 2026.

This means in the next three years, a total sum of N29.2 trillion is planned to be spent on debt servicing by the government.

In contrast, the country plans to spend in total N27 trillion in 2024, N27 trillion in 2025 and N29 trillion in 2026.

In total, a sum of N83 trillion is planned to be spent as expenditure within the period under review.

By implication, Nigeria plans to spend 34% of its expenditure on debt servicing or N1.3 out of every four naira it plans to earn in the next three years on debt servicing.

In a related development, the country hopes to earn N53.5 trillion as revenue between 2024 and 2026 – N18.3 trillion in 2024, N17.3 trillion in 2025 and N17.9 trillion in 2026.

This would mean that 54% of the total revenue of the country will be spent on debt servicing between 2024 and 2026, according to the Medium Term Expenditure Framework data of the country published by the budget office of the federation.

There have been concerns over the debt servicing portfolio of the country.

Already, unofficial reports have it that the country’s debt profile may hit N111 trillion.

Experts worry that Nigeria’s expenditure on debt servicing may hinder meaningful development, as monies meant to be spent on development will be used to service debts.

An analysis of budget performance also further shows how much debt servicing hinders development in Nigeria.

It shows that between 2015 and first three months 2023, Nigeria spent N19.4 trillion on servicing debts but spent N17.8 trillion on capital projects.

Earlier, SaharaReporters reported that the Nigerian government spent 61% of its inflows (revenue) on debt servicing between 2015 and the first three months of 2023.

Review shows that the total debt service figure stood at N19.8 trillion in the eight years and three months under review while revenue accrued was N32.1 trillion.

This was further broken down to show that Federal Government spent N12.2 trillion on servicing domestic debt, $5.9 Billion on servicing external debt in five years between 2019 and the first quarter of 2023, according to details on the budget performance documents.

The debt servicing issues do not stop with the federal government.

SaharaReporters had reported that 25 states of the federation spent a whopping N149.8 billion on debt servicing in the first three months of 2024.

The amounts spent on debt servicing affected development in these states, with their governments spending more on debt servicing than infrastructural developments in the period under review.

Nigeria suffers from developmental challenges, ranging from poor electricity to bad roads, poor water, sanitary and health facilities, unemployment caused by poor economic indices and other challenges that the money spent on debt servicing could have helped to bridge.

The nation is now grappling with the dual challenges of increasing minimum wage payments amidst financial constraints, while also allocating a significant portion of its revenue towards debt repayment, exacerbating the strain on public finances.