Rising Concerns as Nigeria’s Foreign Debt Nears $50 Billion

Nigeria’s external debt is expected to reach $50 billion by the close of the third quarter of 2024, as the Debt Management Office (DMO) prepares to release updated figures on the nation’s public debt.As of March 31, 2024, Nigeria’s total public debt stood at N121.67 trillion ($91.46 billion), with domestic debt at N65.65 trillion ($46.29 billion) and external debt at N56.02 trillion ($42.12 billion). continue Reading>>>

The sharp rise in external debt is primarily due to several loans obtained from the World Bank and other international financial institutions.In June, Nigeria secured a $2.25 billion loan under the Nigeria Reforms for Economic Stabilisation to Enable Transformation (RESET) and the Nigeria Accelerating Resource Mobilization Reforms (ARMOR) programs.

Moreover, the World Bank approved an additional $1.57 billion in loans for critical sectors like education, healthcare, and water management, with $70 million of that amount coming as a grant.In July, the African Development Bank (AfDB) approved $500 million for Nigeria’s Economic Governance and Energy Transition Support Program (EGET-SP) to enhance energy infrastructure. Around the same time, Nigeria obtained $925 million from Afreximbank under a crude oil-backed prepayment facility sponsored by the Nigerian National Petroleum Company Limited (NNPCL). countinue Reading>>>

The rising debt has significantly increased Nigeria’s debt servicing costs. In the first seven months of 2024, payments on external debt surged by 53.63%, from $971.47 million to $2.78 billion.The highest monthly payment occurred in May, with $854.36 million in debt servicing. Fitch Ratings has estimated that by 2025, Nigeria’s external debt servicing costs could hit $5.2 billion.

This growing debt load poses risks to Nigeria’s financial stability, especially in the face of rising global interest rates and ongoing economic difficulties.