The Nigerian government has spent an alarming N8.94 trillion on debt servicing in the first nine months of 2024, accounting for 47% of total expenditure during this period. This represents a sharp 56.8% increase compared to N5.69 trillion in the same period of 2023, according to the Central Bank of Nigeria (CBN).
The surge in debt servicing costs underscores Nigeria’s growing debt burden, exacerbated by widening fiscal deficits. The country’s debt-to-revenue ratio has worsened, with debt servicing now consuming 147% of retained revenue, up from 132% in 2023. Despite generating N6.08 trillion in revenue, debt servicing costs have surpassed this amount, revealing the nation’s increasing reliance on borrowing to manage its finances.
Recurrent expenditure, covering government operations, surged by 45.6%, reaching N15.11 trillion in the first nine months of 2024, compared to N10.38 trillion in the same period last year. Key areas saw significant increases:
Personnel costs rose by 20%, reaching N3.59 trillion.
Overhead costs surged by 51.4%, totaling N892.85 billion.
Transfers more than doubled, reaching N1.31 trillion.
Pensions and gratuities saw a slight decline, from N339.66 billion in 2023 to N336.61 billion in 2024. Capital expenditure grew by 20.8%, rising to N3.86 trillion, but this increase was modest compared to the rise in recurrent spending. This highlights how rising debt servicing costs continue to crowd out vital investments in infrastructure and development.
The country’s fiscal deficit expanded by 39.3%, increasing from N9.25 trillion in the first nine months of 2023 to N12.89 trillion in 2024. This widening deficit highlights the gap between government revenues and escalating expenditures, largely driven by mounting debt servicing costs.
Despite claims by President Bola Tinubu that his administration reduced the debt service-to-revenue ratio from 97% to 68%, the latest data contradicts this, showing the ratio has worsened to a critical 147% in 2024.
Tileriwa Adebayo, CEO of The CFG Advisory, expressed grave concern over Nigeria’s fiscal policy, warning that debt servicing is expected to rise from N8 trillion in 2024 to N16 trillion in 2025. He described this as a “red flag” and urged the government to restructure its financial commitments, suggesting asset sales as a potential solution.
Adebayo also called for exploring alternative financing options to ensure long-term economic stability. The rising cost of debt servicing and the widening fiscal deficit raise significant concerns about Nigeria’s fiscal health and its ability to finance essential development priorities without comprehensive reforms.