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Nigeria’s Debt Service Cost Surges By 28% To N1.17 Trillion In Q3 2022

Nigeria’s Debt Service Cost Surges By 28% To N1.17 Trillion In Q3 2022

Nigeria’s Debt Service Cost Surges By 28% To N1.17 Trillion In Q3 2022

Nigeria’s Debt Service Cost Surges By 28% To N1.17 Trillion In Q3 2022

In the third quarter of 2022, Nigeria paid N1.17 trillion to service its local and foreign debt, up 27.9% from the N912.7 billion paid in the second quarter (Q2 2022). The Debt Management Office of Nigeria has issued a report detailing the country’s debt service for the third quarter of 2022. (DMO).

The report broke down the total debt service cost to be N820.59 billion ($801.24m), with N346.43 billion ($801.24m) going toward servicing foreign debts.

ALSO, READ Foreign Investments On The NSE (NGX) Falls To 14.6% In First Half Of 2022

Meanwhile, by the end of September 2022, Nigeria’s total debt stock had decreased to $101.91 billion from $103.31 billion in June.

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Total debt stock was N42.85 trillion at the end of the previous quarter, but it increased to N44.06 trillion in the most recent quarter. This is because the value of the local currency has dropped relative to the US dollar on the interbank market.

Nigeria’s Debt Service Cost Surges By 28% To N1.17 Trillion In Q3 2022

According to data from the DMO, the official exchange rate declined from N414.72/$1 at the start of the review quarter to N432.37/$1 at the end of the period.

Breakdown of debt stock: Total external debt stock stood at $39.66 billion (N17.15 trillion).

  • Federal Government domestic debt stood at $49.85 billion, an equivalent of N21.55 trillion.
  • States’ domestic debt also stood at $12.41 billion (N5.36 trillion) as of September 2022.
  • Total domestic debt stock was $62.25 billion as of the period under review, which is approximately N26.92 trillion in local currency.

Further analysis: Domestic debt service in Q3 2022 increased by 23.4% compared to N664.73 billion recorded in the previous quarter and represents the highest value on record. Also, external debt service cost surged by 34% from $597.95 million recorded in Q2 2022.

ALSO, READ Top 5 Nigerian States With The Highest External Debt 2022

  • Further breakdown showed a sum of N248.72 billion was spent in July, N152.44 billion in August, while N419.42 billion was spent in September 2022 on domestic debt obligations. Also, N94.99 billion was incurred on interest payments on Nigerian Treasury Bills.
  • Additionally, N685.61 billion was spent as interest payments on Federal government bonds. Other breakdown includes N8.3 billion spent on FGN Sukuk Bonds rentals, N426.01 million interest on FGN Savings Bonds, and N6.25 billion and N25 billion interest and principal payments respectively on Treasury bonds.
  • This brings the total domestic interest payments to a sum of N795.59 billion and a principal repayment of N25 billion.

    Nigeria’s Debt Service Cost Surges By 28% To N1.17 Trillion In Q3 2022

Why this matter: Nigeria continues to borrow to finance its budget deficit as the revenue crisis lingers. According to the Minister of Finance, Zainab Ahmed, FG revenue stood at N4.233 trillion between January and August 2022, while it spent about N3.52 trillion on debt service during the period.

An N4.23 trillion aggregate revenue by the federal government means that it underperformed by 36.3% compared to the N6.65 trillion prorated budget for the period. Also, federal retained revenue underperformed by 33.3%, standing at N3.67 trillion in contrast to the N5.49 trillion expected revenue.

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I Am a financial analyst, Entrepreneur, Blogger and Business model. With 15 years' Consultancy Experience.

IBEH C. JOE

I Am a financial analyst, Entrepreneur, Blogger and Business model. With 15 years' Consultancy Experience.

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