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  • Business
  • Updated: June 11, 2024

2024: Nigeria spends $2.2bn on debt servicing in first five months - CBN report

2024: Nigeria spends $2.2bn on debt servicing in first five

Recent data from the Central Bank of Nigeria, CBN, indicated that the federal government has spent approximately $2.2 billion on debt servicing in the first five months of 2024.

The report, titled 'International Payments Data,' reveals that May saw the highest expenditure on debt servicing, with $854.36 million paid— the largest single-month payment in the past year.

This figure is a significant increase, representing a 297% rise compared to April's $215.20 million and a 286.49% increase over the $221.05 million spent in May 2023.

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 percent higher than what 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 $1.1bn to $3.5bn in 2023, comprising $1.9bn and $1.6bn in market and non-market debt payments, respectively.

Additionally, FBNQuest Research reports that Nigeria’s external debt service payments increased by $1.1 billion, reaching a total of $3.5 billion in 2023. This sum includes $1.9 billion in market debt payments and $1.6 billion in non-market debt payments.

The development follows an announcement by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, that Nigeria will be getting some funds from the World Bank in a few weeks.

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.

Letters of credit, which is a mode of payment used for the importation of goods, dipped by 63.26 percent 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 percent higher than $654.51 million in the same period in 2023.

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