In a concerning development regarding Nigeria’s mounting debt, the country’s debt servicing cost has risen by 55.71% to ₦1.24 trillion in the first quarter of 2023, according to recent data from the Debt Management Office (DMO).
During the January to March period, domestic debt servicing accounted for ₦874.13 billion, while external debt servicing amounted to $801.36 million (equivalent to ₦368.87 billion), resulting in a total of ₦1.24 trillion.
The DMO utilized an exchange rate of $1/N460.3 for external debt servicing.
Comparatively, in the previous quarter (October to December 2022), domestic debt servicing stood at ₦406.77 billion, while external debt servicing amounted to $312.27 million (equivalent to ₦143.74 billion), making a total of ₦550.51 billion.
In its 2022 Sustainability Report, the DMO expressed concern over the Federal Government’s debt service to revenue ratio, which exceeded the recommended threshold of 50% for 2023, reaching a staggering 73.5%.
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Meanwhile, the International Monetary Fund (IMF) has projected that Nigeria will spend 82% of its revenue on debt servicing.
Financial experts, Idakolo Gbolade and Muda Yusuf, have expressed their concerns over Nigeria’s unsustainable debt service to revenue ratio.
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