ABUJA (Sundiata Post) – Nigeria’s total debt, Federal Government and states’ loans, may hit at least N107.38tn soon, following the approval of fresh borrowings for the Federal Government and new securitisation of the Central Bank of Nigeria’s N7.3tn Ways and Means advances.
This was as the Senate, as of December 2023, approved President Bola Tinubu’s request to borrow $7.8bn and €100m as part of the Federal Government’s 2022-2024 borrowing plan.
According to Tinubu, the Federal Executive Council under former President Muhammadu Buhari approved the loan facility on May 15, 2023, to finance infrastructure, health, education, agriculture, insecurity, and other sectors.
While asking for the approval, he said the foreign loan was necessary to bridge the financial gap and return normalcy to economic activities in the country.
In a letter to the senate in November 2023, the president said, “The senate is invited to note that following the removal of fuel subsidy and its impact on the economy in the country, African Development Bank and the World Bank Group have indicated interest to assist the country in mitigating the economic shores and recent reforms with a sum of $1bn and $2bn respectively.
“In addition to the Federal Executive Council approved 2022-2024 external borrowing plan. Consequently, the required approval is 7,864,508,559 dollars and in terms of euros, 1000 million euros.
“I would like to underscore the fact that the projects and programmes borrowing plans were selected based on positive technical economic evaluations as well as the expected contribution to the social economic development of the country, including employment generation, skills acquisitions, supporting the emergence of more enterprenuers, poverty reduction, and food security to improve the livelihood of an average Nigerian.”
He added, “Given the nature of these facilities and the need to consolidate the country to normalcy, it has become exigent to request the senate consideration and approval of the 2022- 2024 external borrowing plans to enable the government to deliver its responsibilities to Nigerians through expeditious disbursement and efficient projects implementation.”
Nigeria’s total debt as of the end of September 2023 was N87.91tn, according to data from the Debt Management Office. The breakdown of this debt revealed total external debt as N31.98tn ($41.59bn) and total domestic debt of N55.93tn.
The total debt includes that of the Federal Government and state governments. Following the recent approvals by the senate, total debt will climb up by at least 22.15 per cent (N19.47tn) to N107.38tn in 2024 if the borrowing plan is followed to the letter.
The component of total debt, if the plan is followed, will include foreign debt of N44.15tn ($49.39bn converted at N891.9/$ and €100m converted at N969.92/€) and domestic debt of N63.23tn (old domestic debt of N55.93tn with new securitised Ways and Means of N7.3tn).
Between January 2022 and September 2023, the Federal Government grew its foreign loan profile by $3.20bn from $38.39bn to $41.59bn. It is unclear whether this is part of the 2022-2024 borrowing plan.
