Nigeria’s debt services increased to $1.8 billion in seven months of 2023, representing 22.3 percent Year-on-Year (YoY) from $1.48 billion reported in seven months of 2022, the Central Bank of Nigeria (CBN) has reported in its latest international payments data.
Nigeria currently owes the African Development Bank (AfDB), Islamic Development Bank (IDB), and Exim Bank of China, among, others.
The breakdown showed that the $112.3million spent in January 2023 was 146.17 per cent higher than the $45.64million spent in December 2022, while in February, it grew by 156.8 per cent to $288.54million.
A further breakdown revealed that the federal government in March spent $400.47million and in April, it dropped to $92.85million.
However, the CBN disclosed that $221.05million was spent on debt services in May and it dropped to $54.36million in June. For July, the figure increased to $641.7million, the highest so far in 2023.
With about $400.47million debt services in March, the government has spent a sum of $801.36 million on debt services in the first quarter of 2023 (Q1), a growth of four per cent from $770.52 million in Q1 2022 and this occurred as the federal government is struggling to boost its revenue base despite its revenue generation efforts.
In 2022, Nigeria spent a total of $2.4 billion to service its external debt, which was a slight increase from the $2.11billion spent in 2021. Under former President Muhammadu Buhari, the apex bank data revealed that $15.1billion was spent on debt services between May 2015 and April 2023.
The International Monetary Fund (IMF) recently said the Federal Government projected to spend 82 per cent of its revenue on interest payments in 2023.
However, members of the Monetary Policy Committee (MPC) of the CBN at the first meeting in 2023 also expressed concerns over increasing debt service amid rising inflation rate and weakening of local currency.
KPMG had also raised alarm that Nigeria’s debt service to revenue ratio may exceed 100 per cent in 2023.
The professional services firm in its macroeconomic snapshot Nigeria’s risk of sliding into critical debt servicing problems unless urgent actions were explored to significantly raise revenue.
On the recent senate approval of the securitisation of N22.7 trillion Ways and Means advances provided to the government by the CBN, KPMG said Nigeria’s debt, which hit N46.3 trillion by the end of 2022, will immediately rise to about N70 trillion.
The firm said with the N8.8 trillion expected new borrowings from both domestic and external means in the 2023 states and federal budgets, the total debt stock will likely stand at about N77.8 trillion by the end of 2023.
In 2022, Nigeria’s debt service-to-revenue ratio was 80.6 per cent — a figure far above the World Bank’s suggested 22.5 per cent for low-income countries like Nigeria.
“With FGN revenue to GDP ratio of 4.49 per cent as of December 2022, Nigeria’s debt service to revenue ratio may surpass 100 per cent in 2023, which will limit the fiscal space and the government’s
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‘Economy loses $5bn to foreign investors in six months’
The Central Bank of Nigeria (CBN), says foreign companies and investors repatriated about $5 billion from the Nigerian economy in six months.
According to the CBN report, the investors repatriated about $5.13 billion as dividends between October 2022 and March 2023.
The apex bank disclosed in its Economic Report for the first quarter that the higher dividend payments to non-residents also increased the deficit in its primary income account.
It said the deficit grew to $2.69 billion in the first quarter of 2023 compared to $2.26 billion in the fourth quarter of 2022.
CBN said the primary income account covers employee compensation and investment income.
The bank said the income may be profits, interests, dividends, and royalties received on existing foreign financial assets and liabilities.
Per the CBN report, dividend payments to foreign investors accounted for $5.13 billion in the period under review. Investment income decreases in six months
The CBN report states that the primary income account increased by 18.7 per cent in Q1 of 2023 due to the 34.9 per cent growth in investment income payments, amounting to $3.09 billion from $2.77 billion in Q4 of 2022.
CBN said: “The compensation of employees’ account maintained a surplus position, increasing by 6.2 per cent to $0.06bn, relative to the level in 2022Q4.”
The banking regulator stated that the outflow from the account was undermining the productivity of the real sector as Forex resources were used for external debt servicing.
Per the report, the net deficit in the income account has fallen in recent years due to lower out payments of dividends, shared branch profit, and other interest payments.
In its audited report, the CBN said it generated a profit of N103.85 billion, the highest in seven years.
This represents a 38.24 per cent increase in profit compared to the N75.12 billion recorded the previous year.
According to new Foreign Direct Investment (FDI) data released by the National Bureau of Statistics, 28 states could not attract Foreign Direct Investment in the quarter of 2023.
Of the 36 states in Nigeria and FCT, only Lagos, Abuja, Adamawa, Akwa Ibom, Ekiti, Ogun, Ondo, and Niger states saw capital inflows during the period under review. The total capital inflows totaled $1.13 billion.
Lagos attracted $704 million in investment under review, followed by Abuja with $410 million, and Akwa Ibom at $5.21 million. (Source: Legit.ng)
