President Bola Tinubu has formally requested the National Assembly to approve a new external borrowing of ₦1.767 trillion (approximately $2.209 billion) as part of the 2024 budget. The funds are intended to partially finance the ₦9.7 trillion deficit outlined in the 2024 appropriation bill.
The President's request, delivered during Tuesday’s plenary session, was accompanied by the submission of the Medium-Term Expenditure Framework/Fiscal Strategy Paper (MTEF/FSP) for 2025–2027 and an amendment bill to establish the National Social Investment Programme (NSIP). The proposed amendment aims to position the social register as the primary tool for implementing federal social welfare initiatives.
This development comes amid growing concerns about Nigeria’s rising debt servicing obligations. Data from the Central Bank of Nigeria (CBN) reveals that the Federal Government spent $3.58 billion servicing foreign debt in the first nine months of 2024, a 39.77% increase compared to $2.56 billion during the same period in 2023. The highest monthly debt service payment occurred in May 2024, totaling $854.37 million, significantly higher than the $221.05 million recorded in May 2023.
The escalating cost of debt servicing reflects Nigeria’s increasing dependence on external borrowing, compounded by the weakening naira, which has devalued from₦899.39/$1 in December 2023 to ₦1,470.19/$1 by June 2024. This has significantly increased the naira-denominated value of the nation’s foreign debt.
At the state level, Nigeria’s 36 states collectively reported a debt increase to ₦11.47 trillion as of June 2024, up from ₦10.01 trillion in December 2023. This growth, driven partly by the devaluation of the naira, contrasts with a reduction in domestic debt from ₦5.86 trillion to ₦4.27 trillion.
A report by BudgIT highlights the fiscal challenges faced by state governments, noting that 32 states relied on federal allocations for at least 55% of their revenue in 2023. Lagos State stood out as the most self-sufficient, contributing ₦1.24 trillion to the combined revenue of all 36 states, while also holding the highest foreign debt of $1.24 billion.
Despite the rise in revenue for states—up 31.2% from ₦6.6 trillion in 2022 to ₦8.66 trillion in 2023—the report underscores the over-reliance on federally distributed revenue, exposing states to economic shocks tied to crude oil prices and external factors.
The ongoing reliance on federal allocations highlights the urgency of fiscal reforms to improve internally generated revenue and reduce vulnerability to external economic pressures.
