A looming debt crisis is on the horizon as Nigeria’s external debt stock may skyrocket to $45.1 billion by the end of 2024.
This alarming projection comes on the heels of the Federal Executive Council’s (FEC) approval of a $2.2 billion external borrowing plan, aimed at financing the Federal Government’s 2024 Appropriation Act.
The Debt Management Office (DMO) recently reported a $780 million increase in Nigeria’s external debt stock during the second quarter of 2024, pushing the total from $42.12 billion in March to $42.9 billion by June 2024. Minister of Finance Wale Edun shed light on the fresh borrowing plan, stating that it comprises Eurobond and Sukuk offerings valued at $1.7 billion and $500 million, respectively. Edun emphasized that Nigeria’s ability to access the international capital market demonstrates acceptance and support for President Bola Ahmed Tinubu’s economic reforms.
However, experts warn that Nigeria’s rising debt profile poses significant risks. The country spent a staggering $3.58 billion servicing its foreign debt in the first nine months of 2024, marking a 39.77 percent increase from the $2.56 billion spent during the same period in 2023. Moreover, the DMO reported that Nigeria’s total debt stock had risen to N134.3 trillion by the end of June 2024.
Critics argue that Nigeria’s increasing debt burden is unsustainable. Muda Yusuf, Director of the Centre for the Promotion of Private Enterprise (CPPE), expressed concerns about the country’s insufficient revenue capacity and ongoing infrastructural deficits. With Nigeria’s debt stock projected to reach $45.1 billion by year-end, it remains to be seen how the government will address these pressing concerns.
*Rising Debt: A Cause for Concern*
– _Growing Debt Stock_: Nigeria’s external debt stock increased by $780 million in the second quarter of 2024.
– _Borrowing Plans_: The FEC approved a $2.2 billion external borrowing plan to finance the 2024 Appropriation Act.
– _Debt Servicing_: Nigeria spent $3.58 billion servicing its foreign debt in the first nine months of 2024.
As Nigeria navigates the complexities of its rising debt profile, policymakers must carefully consider the long-term implications of their decisions.
