According to the Central Bank of Nigeria (CBN), the Federal Government spent $112.35 million in January 2023 to service external debt.
According to data from the CBN’s Weekly International Payments, the amount spent in January was 146.17 percent higher than the amount spent in December 2022 ($45.64 million).
This occurred as the federal government struggled to increase its revenue base despite efforts to increase revenue.
In January 2023, the Federation Account Allocation Committee distributed N750.17 billion to the three levels of government.
The figure is N240.02 billion less than the N990.19 billion shared in December 2022.
Nigeria spent $2.4 billion in 2022 to service its external debt, a slight increase from $2.11 billion in 2021.
Meanwhile, the Federal Government deducted more than N78 billion from state allocations for external debt service.
This was based on data from the National Bureau of Statistics’ (NBS) Federation Account Allocation Committee Disbursement reports.
The deductions were made in 2022 from the Federation Account allocations made to state governments.
The federation account is currently managed under a legal framework that allows funds to be distributed across three major components: statutory allocation, VAT distribution, and the derivation principle.
Checks revealed that Lagos was the hardest hit by the deductions, with approximately N23.61 billion deducted for external debt servicing in 2022.
It was followed by Kaduna, which received N10.25 billion, and Cross River, which received N7.56 billion.
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According to the International Monetary Fund (IMF), the Federal Government will spend 82% of its revenue on interest payments in 2023.
External debt (including private sector debt) will rise to $121.6 billion, while external reserves will rise to $37.5 billion, according to the IMF.
This was revealed in a projections table in its ‘IMF Executive Board Concludes 2022 Article IV Consultation with Nigeria Summary.’
The projections showed that the share of government revenue used for interest payments fell from 96.3 percent in 2022 to 82 percent in 2023.
It went on to say that interest payments accounted for 86.1 percent and 87.8 percent of the Federal Government’s revenue in 2020 and 2021, respectively.
