The Federal Government has spent N2.05 trillion to service Nigeria’s domestic debts in the year 2021, representing an increase of 10.8% compared to the N1.85 trillion incurred in the previous year, the Debt Management Office (DMO) has revealed.
The DMO said N1.66 trillion was paid as interest on federal government bonds, which accounted for 80.8% of the total amount incurred on domestic debt service.
“It is also worth noting that the amount spent on servicing domestic debts in 2021 is the highest on record,” it said.
Meanwhile, Nigeria’s domestic debt profile rose by N3.49 trillion in the review period to N23.7 trillion as of December 2021 from N20.21 trillion recorded in the previous year. Domestic debt accounted for 59.9% of Nigeria’s total debt profile, while external debt represents 41.1% of the total.
The rise in the country’s debt profile is attributed to the N5.6 trillion budget deficit for the review year by the federal government. Recall that the federal government signed a budget of N13.59 trillion for 2021, which needed a sum of N5.6 trillion to fund the budget deficit.
The budget deficit for the year informed the need for a N2.34 trillion new loans each from both domestic and foreign sources, N709.69 billion multilateral/bilateral loan drawdowns and N205.15 billion privatization proceeds.
A cursory look at the breakdown of Nigeria’s domestic debt service, a sum of N81.81 billion was incurred as charges for Nigerian treasury bills, accounting for 4% of the total amount. In the same vein, a sum of N219.41 billion was paid back as part of the principal for promissory notes, while N25 billion was paid for treasury bonds.
