In a recent report, the Federal Government of Nigeria disclosed that it has spent a staggering N1.26 trillion on servicing the country’s external and domestic debt in just the first two months of the year. This spending represents a significant portion of Nigeria’s budget, raising concerns about the sustainability of the nation's fiscal policy.
The debt servicing expenditures, which include interest payments on both foreign and domestic borrowings, reflect the ongoing strain on Nigeria’s finances. Experts argue that while the government has prioritized meeting its debt obligations, the heavy financial burden could undermine other critical sectors, including healthcare, education, infrastructure, and social welfare.
The data, released by the Ministry of Finance, shows a marked increase in the cost of debt servicing compared to previous years. This rise is attributed to several factors, including the country’s growing debt profile, the depreciation of the naira against major currencies, and the high interest rates on both local and foreign loans.
As Nigeria’s public debt continues to climb, the impact of these payments on the country’s development and economic stability is becoming more pronounced. Economists have raised alarms about the risk of debt overhang, where the country may struggle to finance essential public services while meeting its debt obligations.
The Nigerian government has emphasized the importance of continuing debt servicing to maintain investor confidence and preserve the country’s credit rating. However, stakeholders are urging the administration to pursue more sustainable strategies, such as enhancing domestic revenue generation, improving debt management, and reducing the dependence on loans for development.