Kehinde Fajobi
President Bola Tinubu has submitted a proposal to the National Assembly requesting approval for a new external loan of ₦1.767 trillion to help finance Nigeria’s 2024 budget deficit of ₦9.7 trillion.
The request was read out during Tuesday’s plenary session in the National Assembly.
Along with this, the President also forwarded the Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) for 2025-2027, as well as the National Social Investment Programme Establishment Amendment Bill, aimed at using the social register as the main tool for implementing federal welfare programmes.
This comes amid reports that the Central Bank of Nigeria (CBN) revealed the federal government spent $3.58 billion servicing foreign debt in the first nine months of 2024.
The amount marked a 39.77% increase from the $2.56 billion spent during the same period in 2023.
The CBN’s report shows a significant surge in debt servicing costs, with the highest payment recorded in May 2024 at $854.37 million, a 286.52% increase from May 2023.
Overall, debt servicing payments showed fluctuations throughout the year, including a sharp increase of 398.89% in January 2024.
Further breakdowns indicate the rising burden on Nigeria’s foreign debt obligations, especially as the naira’s devaluation impacts repayment costs.
In addition, there has been a significant rise in the debts of Nigeria’s 36 states, which reached ₦11.47 trillion by June 2024, a 14.57% increase from December 2023.
External debt for the states also grew from $4.61 billion to $4.89 billion, while domestic debt declined slightly.
The increase in state debt is attributed to rising foreign debt, worsened by the devaluation of the naira.
States like Lagos, the most indebted in foreign currency, continue to bear a significant portion of this burden, with over-reliance on federal transfers for revenue.
The fiscal strain is compounded by fluctuations in crude oil prices, highlighting the states’ vulnerability to external economic shocks.
Meanwhile, the total revenue of the 36 states increased by 31.2% in 2023, with Lagos contributing the largest share.
Despite this improvement, many states remain heavily dependent on federal allocations, raising concerns about fiscal sustainability.