External debts have cost the nation a total of $1.62bn in interest payment in the last five years.
Statistics obtained from the Debt Management Office (DMO) showed on Friday that the country spent a total of $331,059, 850 on servicing its external debts in 2015.
The nation’s external debt burden stood at $11.26bn as of June 31, 2016.
In 2014, a total of $346,723, 290 was spent on the same item; while $297,329,300 was spent in 2013.
In 2012, the servicing of external debts cost the nation a total of $293,003,540, while it cost a total of $351,619, 070 to service the debts in 2011. This means that in the past five years, the nation spent a total of $1.62bn to service its external loan liabilities.
The trend has continued this year with $117,660,770 spent on serving the country’s external debt in the first quarter of the year and $47,998,430 in the second quarter, thereby making a total of $165,659,200 for the first six months of 2016.
In terms of sources, multilateral agencies contributed the highest percentage to the country’s indebtedness.
As of June 30, 2016, the multilateral agencies accounted for 70.96 per cent of the country’s external debt exposure.
This is made up of the International Development Association, which accounted for $6.84bn; International Bank for Reconstruction and Development, $7.25m; African Development Bank, $400.73m; and the African Development, $538.18m.
Other multilateral creditors include Banque Arabe de Economique en Afrique, which contributed $5.52m; the EDF, $71.47m; Islamic Development Bank, $19.87m; and International Fund for Agricultural Development, $103.01m.
Bilateral sources accounted for $1.58bn or 11.73 of the country’s external debt exposure.
The multilateral sources include China, through the EXIM Bank of China, $ 1.49bn; France, $182.95m; Japan, $80.44m; and Germany, $11.66m.
Commercial Eurobonds accounted for $1.5bn or 14.54 per cent of the country’s external debt as of June 30.
The 36 states of the federation and the Federal Capital Territory owe $3.65bn of the foreign debts, as against the $7.61bn owed by the Federal Government.
Lagos State, which is the largest economy in the country, owes a total of $1.43bn. Thus, the state holds 39.17 per cent of the country’s total subnational foreign debts.
Kaduna State, with a foreign debt of $225.28m, comes in the second position. It holds 6.16 per cent of the total subnational foreign debts.
Edo State, with a total of $179.52m as of June 30, holds 4.91 per cent of the country’s subnational foreign debts.
Other states ranking among the highest in the subnational foreign debts include Cross River, with $141.47m or 3.87 per cent; and Ogun State, $103.55m or 2.83 per cent.
Bauchi owes $97.23m or 2.66 per cent of the total; Osun, $78.93m or 2.16 per cent; Adamawa, $77.14m or 2.11 per cent; Enugu, $74.46m or 2.04 per cent; Katsina, $68.99m or 1.89 per cent; and Oyo, $67.56m or 1.85 per cent.
Some of the least indebted states of the federation are Borno, with $21.89m; Taraba, $23.01m; Plateau, $29.24m; Yobe, $29.28m; Jigawa, $32.62m; Kogi, $33.56m; Benue, $34.26; Federal Capital Territory, $34.8m; Zamfara, $35.07m; and Delta, $42.21m.
The World Bank Lead Economist for Nigeria, Mr. Khwima Nthara, is one of those who think that the country’s exposure to debt is very low. He, however, believes that the nation should be mindful of its total debt servicing cost.
Nthara said Nigeria’s total debt profile was sustainable but added that the cost of servicing it, especially the domestic debt component, was too high and out of sync with the country’s revenue profile.
He said, “Yes, debt has been on the increase but Nigeria’s debt remains low. The debt stock has just increased from 12 per cent to 14 per cent of the Gross Domestic Product. The most important problem that Nigeria is facing is debt service. Nigeria has a large debt to revenue ratio and largely most of the debt is domestic, which is crowding out the private sector.
“So, while Nigeria does not have a debt sustainability problem at the moment; indeed, there is an issue on how the debt is being financed. And that is why the Debt Management Office is putting in place new strategies to increase external financing.” – Punch.
