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Nigeria’s debt servicing rises by 68.8% in H1

Published

2 months ago

October 7, 2024

The latest data from the Central Bank of Nigeria has revealed that Nigeria’s debt servicing reached N6.04tn in the first half of 2024, a remarkable increase of 68.8% over the N3.58tn reported during the same time in 2023.

This suggests that the Nigerian government’s debt servicing expenses were around three times higher than its staff expenditures throughout the review period.

The devaluation of the naira for international debt repayments is probably the primary cause of this steep increase in debt service requirements. The Federal Government is facing an increasing strain as repayment of debts takes up a substantial amount of its financial resources.

Personnel costs, on the other hand, increased 17.6% from N1.97tn in H1 2023 to N2.32tn in H1 2024.

Debt servicing is now nearly three times the government’s salary bill, according to this spending pattern, which raises questions about the sustainability of the debt profile of the nation and the mounting strain on public finances.

The overall amount spent on salaries in the first half of 2024 increased very slightly, despite the country’s rising cost of living.

Approximately 50% of the Federal Government spending in H1 2024 went towards debt service. The total amount spent by the government increased by 29.6% to N12.17 trillion in H1 2024 from N9.39 trillion in H1 2023. The increase in overall spending has led to a wider fiscal deficit, with N6.6 trillion in H1 2023 and N8.44 trillion in H1 2024 representing a 27.9% growth in deficit.

The government’s difficulty in managing its earnings and expenditures is highlighted by this expanding imbalance, which is made worse by the government’s mounting debt commitments.

Nigeria’s present fiscal trajectory may not be sustainable given the country’s ongoing expansion in the budget deficit and growing reliance on debt financing to make up for revenue deficits.

Recurrent spending, which includes staff compensation and debt servicing, increased by 51.4% from N6.72 trillion in H1 2023 to N10.17 trillion in H1 2024.

The burden of debt servicing, which currently accounts for a sizable amount of ongoing expenses, keeps the government’s finances tight.

In H1 2024, recurrent expenses alone more than doubled revenue, accounting for nearly 27% of retained revenue. This shows how much fiscal strain the government is under.

Capital expenditure, which is essential for long-term economic growth and the development of infrastructure, decreased by 25.3% from N2.68tn in H1 2023 to N1.99tn in H1 2024, despite an increase in overall spending.

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IMF mission concludes 4th loan program assessment in Egypt

Published

3 hours ago

November 22, 2024

Ifeoluwa Dada

Following the completion of a recent visit to Egypt, the International Monetary Fund (IMF) has announced that its mission had achieved significant strides in policy talks aimed at concluding the fourth review of the IMF loan program.

The review is the fourth in Egypt’s most recent 46-month IMF loan program, which was authorised in 2022 and increased to $8 billion this year following an economic crisis characterised by high inflation and chronic foreign exchange shortages. It may unleash more than $1.2 billion in financing.

Along with reaffirming its commitment to maintain a flexible exchange rate system, the IMF stated that Egypt “has implemented key reforms to preserve macroeconomic stability,” including the unification of the currency rate that facilitated imports.

Earlier on Wednesday, Egypt’s Prime Minister Mostafa Madbouly said Cairo has asked the IMF to modify the targets for the programme not only for this year, but for its full duration, he added without giving more details.

“Discussions will continue over the coming days to finalize agreement on the remaining policies and reforms that could support the completion of the fourth review,” the IMF added in its statement.

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Kenya seeks $750m from World Bank, obtains $200m from AfDB— Official

Published

2 days ago

November 20, 2024

Ifeoluwa Dada

The head of debt management for the finance ministry told Reuters that Kenya had obtained a $200 million loan from the African Development Bank (AfDB) and was negotiating a fresh $750 million loan with the World Bank.

After being forced to abandon proposed tax rises costing more than 346 billion shillings ($2.68 billion) in June due to fatal demonstrations, the East African nation’s administration, which has been grappling with significant debt, has been frantically seeking fresh funding.

The Finance Ministry’s public debt management office director general, Raphael Owino, told Reuters that the IMF’s October clearance of the seventh and eighth reviews, which opened the door for a $606 million loan tranche, had aided the ministry’s talks for more loans.

“The World Bank is coming on board, riding on the back of IMF receipts,” Owino said. “The AfDB is already on board.”

The discussions for more assistance, which came under the World Bank’s “Development Policy Operations” (DPO) with the government, were confirmed by a representative at the organization’s Kenya office.

“The amount of the current (loan) is yet to be determined. The amount will also depend on the implementation of the policy reforms agreed upon,” the spokesperson told Reuters, adding that past DPO loans averaged about $750 million.

In May, the World Bank approved the latest round of DPO loans, totalling $1.2 billion.

According to a statement made last month by Finance Minister John Mbadi, Kenya has set a foreign borrowing goal of 168 billion shillings for the fiscal year ending in June 2025.