According to reports, domestic debt service cost for the year under review stood at N5.97 trillion, representing a 14.15% increase from N5.23 trillion in 2023. The increase is due to higher interest rates and rising domestic borrowing.
Nigeria spent about $4.66 billion on external debt servicing, an increase of 167% from N2.57 trillion recorded in the previous year.
The increase in debt servicing costs is due to increasing global interest rates and the naira depreciation, which made dollar loans more expensive.
An analysis of the data shows that domestic debt continues to account for a major part of Nigeria’s debt-servicing expenses, despite the increase in external debt servicing. Nigeria’s debt service last year increased by 36.27% to about N5.97 trillion, relative to N4.38 trillion in 2023.
The increase is about N1.59 trillion, showing the growing debt service burden on Nigeria. DMO data shows that most of the domestic debt service last year was due to the Federal Government Bond, which accounted for N4.69 trillion, a 78.59% increase. That represents an increase from N3.66 trillion, showing a rise of N1.03 trillion or 28.2%.
FGN Bonds’ dominance in the domestic debt service profile shows the government’s reliance on long-term debt financing for its budgets. This marks an increase from N3.66 tn in 2023, indicating a rise of about N1.03 tn or 28.2 per cent. Nigeria’s Treasury bills contributed about N747.15 billion to the total domestic debt service last year, relative to N326.12 billion in 2023.
Further findings showed that Nigeria’s external dent service for last year increased to $4.66 trillion relative to $3.50 billion in 2023. The amount represents a yearly increase of about 33% of $1.16 billion. DMO data shows that most of the external debt service for last year was paid to commercial creditors with $1.47 billion.
