Nigeria Government Spends N446bn To Service Debt In Four Months

The Nigeria Ministry of Finance has revealed that the Federal Government has spent a total of N446bn to service the nation’s domestic and external debts between January and April 2016.

The figures are contained in the Consolidated Income and Disbursement Account of the Federal Government for the first four months of this year prepared by the Office of the Accountant-General of the Federation.

The N446.44bn, when compared to the N317.87bn spent for the same purpose in the first four months of 2015, according to the document, represents an increase of N128.57bn or 40.4 per cent.

A month-by-month breakdown of the amount spent on debt servicing showed that the sum of N11.04bn, made up of N5.77bn for domestic and N5.27bn foreign, was spent in January; while February had N234.66bn (N229.58bn for domestic and N5.08bn for foreign).

In the month of March, the document put the amount spent on debt servicing at N119.09bn made up of N114bn for domestic debt and for N5.08bn foreign debt; while the sum of N81.63bn was spent in April, with N76.54bn and N5.08bn allocated for domestic and foreign debt servicing, respectively.

In the 2016 budget, the Federal Government had proposed to spend N1.475tn to service the nation’s debt.

According to the budget, a total sum of N1.30tn is expected to be spent servicing the domestic component of the nation’s debt, while N53.48bn is for foreign debts.

In addition, a total sum of N113.44bn was budgeted as a sinking fund to enable the government to retire maturing loan obligations.

The 2016 budget has a fiscal deficit of N2.22tn, representing 2.16 per cent of Nigeria’s Gross Domestic Product.

The deficit, according to the government, will be financed from borrowings of N1.84tn made up of domestic borrowing of N984bn and foreign borrowing of N900bn.

This, according to the budget document, is expected to increase the country’s overall debt profile to 14 per cent of the GDP.

The Debt Management Office had said refinancing 30 per cent (N2.56tn) of Nigeria’s total domestic debt of N8.4tn in the next one year posed a high risk to the economy.

It explained that the main risks to the existing public debt portfolio were the high refinancing risk, given that more than 30 per cent of the domestic debt would mature within one year; and the high interest rate risk arising from the high proportion of domestic debt due for re-fixing within the coming year, and therefore, exposed to changes in interest rates.