President Bola Ahmed Tinubu’s government is set to start paying debt service as Nigeria’s economy experienced a positive growth rate of 2.99 per cent, surpassing the 2.3 per cent growth seen in the first quarter of 2024.
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, made this known during the ministerial scorecard presentation in Abuja on Tuesday, May 28, 2024.
According to him, the improvement in economic growth highlights the effectiveness of President Bola Tinubu’s economic strategy.
“This growth in agriculture provides the monetary authority with the leverage needed to stabilize foreign exchange (FX) rates,” Edun explained. “By continuing on this path and intensifying our efforts, we are on track to lift many Nigerians out of poverty,” He said.
The minister, who said that revenue collection had also seen significant improvements, added that it has enabled the government to service its debts without resorting to the Central Bank’s Ways and Means advances, a practice that has previously been a cause for concern regarding fiscal discipline and inflation.
The finance minister emphasized that these positive economic indicators reflect the current administration’s commitment to sustainable economic growth and fiscal responsibility.
Speaking further, the finance minister stated that the government now has enough to pay its debt.
“What that means is that the government can now pay its way. The government is paying its debt service without resulting in Ways and Means, particularly international debt service,” the minister said.
“That process that has been put in place, is one that we have mandated not just by Mr. President, but even the national assembly in passing the 2024 budget, insisted that Nigeria’s money that was in the hands of parastatals, agencies, or other enterprises needed to be brought in.
“That has been done by the government, not in as comfortable a situation as we would like to be, but onwards where we’ve paid our way domestically, internationally.”
Edun also added that continuing on this path would result in an expanding economy and enhanced living standards for Nigerians.
His words: “We have room to feel that continuing on these paths, redoubling our efforts, following Mr President’s agenda, at the state level and federal level, will lead us to a growing economy that takes us out of poverty and produces a better life for Nigerians.”
Nigeria incurred a debt service of $3.5 billion for its external loans in the fiscal year ended 2023 according to data from the Central Bank of Nigeria (CBN).
The data is contained in the central bank’s latest Quarterly Statistical Bulletin.
This $3.5 billion spent represents a 55% increase from the $2.6 billion incurred in 2022 as debt service related payments for the country’s external debts.
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Data from the Debt Management Office indicates Nigeria has a total external debt portfolio of $42.29 billion up from $41.69 billion in 2022.
According to the data published by the apex bank, Nigeria incurred $801.36 million, $368.26 million, $1,390.72 million and $943.17 million in the first, second, third and fourth quarter respectively.
Starting at $464.1 million in 2017, these costs have steadily escalated. By 2018, the figure had more than tripled, peaking at $1.472 billion.
After a slight decrease in 2019 to $1.334 billion, the costs climbed annually, culminating in 2023’s record high of $3.503 billion.
The pattern indicates a growing dependence on external borrowing amidst challenging global economic conditions.
This substantial increase in debt servicing demands a large portion of Nigeria’s annual budget, restricting government spending in critical sectors such as health and education.
It also poses a risk to the nation’s economic growth and may deter foreign investment, essential for economic stability.
