The Central Bank of Nigeria (CBN) has revealed that the Federal Government spent about $2.2 billion on debt servicing in the first five months of this year.
The ‘International Payments Data,’ released on Monday by the CBN, revealed that Nigeria spent the highest on debt financing in May, at $854.36 million, which is also the highest paid in a single month in the past year.
This figure is about 297 per cent higher than it spent on debt servicing in April and 286.49 per cent higher than the $221.05 million the country spent in May 2023.
Specifically, the report showed that in April, debt servicing gulped $215.20 million, $276.16 million in March, $283.22 million in February and $560.52 million in January.
The entire amount is about 96.32 per cent higher than what the FG spent on debt servicing within the same period in 2023, which stood at $1.12 billion.
According to FBNQuest Research, Nigeria’s external debt service payments increased by $1.1 billion to $3.5 billion in 2023, comprising $1.9 billion and $1.6 billion in market and non-market debt payments, respectively.
Recall that Nigeria’s public debt surged to N97.34 trillion ($108 billion) as of the fourth quarter of 2023. According to the Debt Management Office (DMO), this amount comprises the domestic and external debt stocks of the FG, the 36 state governments and the Federal Capital Territory.
It noted that total domestic debt, which is N59.12 trillion, accounted for 61 per cent of the total public debt stock, while external debt at N1438.22 trillion accounted for the balance of 39 per cent.
Meanwhile, CBN data indicated that letters of credit declined significantly in the first five months of the year compared to the same period in 2023.
Further analysis showed that letters of credit, which is a mode of payment used for the importation of goods, dipped by 63.26 per cent to $279 million from $762.03 million in the first five months of 2023.
LCs play a vital role in facilitating international trade in Nigeria, offering a reliable and secure payment method that benefits both importers and exporters.
On the upside, the CBN International Payments Data showed that total direct remittances hit $841 million in five months, about 28.55 per cent higher than $654.51 million in the same period in 2023.
