Nigeria spent a total of N13.12tn on debt servicing in 2024, representing a 68 per cent increase from the N7.8tn recorded in the previous year, according to an analysis of fresh data from the Debt Management Office.
The KUKURUKU observed that the debt servicing costs recorded in 2024 surpassed the budgeted allocation of N12.3 tn for the year.
The higher-than-expected expenditure highlights the increasing pressure of debt obligations on the nation’s fiscal sustainability.
For the 2025 budget, the Federal Government has earmarked N16.tn for debt servicing, reflecting the government’s anticipation of continued debt-related expenses.
This development comes amid rising borrowing costs and an increasing debt burden, putting pressure on the country’s fiscal position.
The KUKURUKU learnt that the domestic debt service cost for 2024 stood at N5.97 tn, reflecting a 14.15 per cent rise from the N5.23 tn recorded in 2023.
The significant increase is attributed to higher interest rates and increased domestic borrowing.
On the external front, Nigeria spent $4.66bn (equivalent of N7.15tn at an exchange rate of N1,535.32/$1), marking a sharp increase of 167 per cent from N2.57tn recorded in 2023.
The surge in external debt servicing costs is linked to rising global interest rates and the depreciation of the naira, which has made dollar-denominated debt more expensive to service.
The breakdown of the data indicates that domestic debt continues to account for a significant portion of the country’s debt servicing expenses, despite the steep increase in external debt service costs.
Nigeria’s domestic debt service for 2024 rose by 36.27 per cent to approximately N5.97 tn, compared to N4.38 tn in 2023.
This represents a significant increase of about N1.59 N1.59tn, highlighting the growing burden of debt servicing on the country’s fiscal position.
Data from the Debt Management Office showed that the bulk of the domestic debt service in 2024 was attributable to Federal Government Bonds, which accounted for N4.69 tn, representing about 78.59 per cent of the total debt service.
This marks an increase from N3.66 tn in 2023, indicating a rise of about N1.03 tn or 28.2 per cent.
The dominance of FGN Bonds in the domestic debt service profile highlights the government’s reliance on long-term debt instruments to finance its budgetary obligations.
Nigeria Treasury Bills contributed N747.15bn to the total domestic debt service in 2024, compared to N326.12bn in 2023.
This represents an increase of about 129 per cent, signifying a substantial rise in the interest burden from short-term borrowing instruments.
Other notable contributions to the debt service included the Federal Government Savings Bonds and FGN SUKUK Bonds, which recorded interest payments of N6.38bn and rentals of N158.43bn, respectively.
The FGN Green Bonds recorded a debt service of N2.18bn, consistent with the previous year.
Promissory note principal repayments also grew significantly, with N265.86bn recorded in 2024 compared to N277.16bn in 2023.
This represents a marginal decline of 4.08 per cent, indicating a reduction in the redemption of promissory notes.
Domestic bondholders emerged as the biggest beneficiaries of debt servicing payments, reflecting the government’s commitment to honouring obligations on long-term securities.
Analysis by The KUKURUKU further showed that Nigeria’s external debt service for 2024 rose significantly to $4.66bn, compared to $3.50bn in 2023.
This represents a year-on-year increase of approximately 33 per cent or $1.16bn. The increase reflects a rising debt burden amid Nigeria’s ongoing efforts to manage its external obligations.
Data from the Debt Management Office shows that the bulk of the external debt service in 2024 was paid to commercial creditors, with a total of $1.47bn.
This category includes Eurobonds, which alone accounted for $1.15bn, representing about 78.5 per cent of the total commercial debt service.
The second-largest category was multilateral creditors, amounting to $2.62bn. The largest chunk within this category went to the International Monetary Fund, which received $1.63bn, representing about 62.2 per cent of the total multilateral debt service.
The International Development Association of the World Bank followed, with payments totalling $663.23m.
Other multilateral creditors, including the African Development Bank and the International Bank for Reconstruction and Development of the World Bank, also featured prominently.
Bilateral creditors were the third-largest group, with a total debt service of $570.67m. The Exim Bank of China received the most in this category, amounting to $362.60m, representing about 63.5 per cent of the bilateral payments.
Other bilateral creditors included France’s Agence Française de Développement with $66.45m and Germany’s Kreditanstalt für Wiederaufbau with $35.91m.
An analysis of the year-on-year movement reveals that commercial debt service payments surged by 23.7 per cent from $1.93bn in 2023 to $1.47bn in 2024.
