Q3 2022: Nigeria’s debt service cost surges by 28% to N1.17 trillion
Nigeria allocated N1.17 trillion in the third quarter of 2022 for settling its domestic and international obligations, marking a 27.9% rise from N912.7 billion in the second quarter.
This figure is derived from the Debt Management Office’s issuance of Nigeria’s debt service report for Q3 2022. According to the report’s segmentation, N346.43 billion (or $801.24 million) was utilized for expenses related to servicing international debt, while N820.59 billion was designated for domestic obligations.
Nigeria’s aggregate debt stock dropped from $103.31 billion in June 2022 to $101.91 billion by the conclusion of September 2022.
Conversely, when measured in local currency, the cumulative debt stock rose to N44.06 trillion from N42.85 trillion in the previous quarter. This shift results from the local currency depreciating against the US dollar in the official market.
Data from the DMO indicates that the official exchange rate fell from N414.72/$1 at the beginning of the review quarter to N432.37/$1 at the end of the quarter.
Segmentation of debt stock
The total amount of external debt stood at $39.66 billion (N17.15 trillion).
Domestic obligations owed by the federal government amounted to $49.85 billion, or N21.55 trillion.
As of September 2022, states had an accumulated domestic debt of $12.41 billion (N5.36 trillion).
At the time of review, the total domestic debt stock measured $62.25 billion, roughly N26.92 trillion in local currency.
The domestic debt service in the third quarter of 2022 surged by 23.4% over the N664.73 billion recorded in the preceding quarter, making it the largest amount on record. The expenses for servicing external debt jumped 34% from the $597.95 million documented in Q2 2022.
Further analysis indicated N248.72 billion was expended on domestic debt commitments in July, N152.44 billion in August, and N419.42 billion in September 2022. Additionally, interest payments on Nigerian Treasury Bills incurred N94.99 billion.
Furthermore, N685.61 billion was allocated for interest on bonds issued by the federal government. In addition, N8.3 billion was designated for FGN Sukuk Bond rentals, N426.01 million for FGN Savings Bond interest, and N6.25 billion as well as N25 billion for interest and principal payments on Treasury Bonds, respectively.
With a principal repayment of N25 billion, the cumulative amount of domestic interest payments is now N795.59 billion.
Nigeria continues to accrue debt to bridge its budget shortfall as its revenue crisis lingers. FG revenue from January to August 2022 totaled N4.233 trillion, according to Finance Minister Zainab Ahmed, whereas debt service expenses were N3.52 trillion.
The federal government underperformed by 36.3% relative to the N6.65 trillion prorated budget for the timeframe, bringing total revenue to N4.23 trillion. Moreover, in comparison to the N5.49 trillion projected revenue, the federal retained revenue fell short by 33.3%, totaling N3.67 trillion instead.
