In order to pay back its foreign loans, the federal government has taken out more than N415 billion from state government budgets.
Data from the National Bureau of Statistics’ Federation Account Allocation Committee Disbursement reports supported this.
The deductions were taken from the Federation Account allotment made to state governments between 2019 and 2023.
Currently, the federation account is administered under a legal structure that permits the sharing of funds under three main headings: derivation principle, value added tax distribution, and statutory allocation.
The sub-nationals incurred deductions of N57 billion in 2019 and N74 billion in 2020, which increased to N86.2 billion in 2021, N78 billion in 2022, and N120.01 billion as of December 2023, according to an analysis of the report.
The number showed an 11% increase, indicating the nation’s massive debt in the face of declining revenue.It was noted that Lagos was the state most affected by the deductions, with roughly N131.1 billion taken out to pay off external debt.The next two most deducted states were Cross River (N21.59 billion) and Kaduna (N45.85 billion).From Oyo, Rivers, Ogun, and Edo, respectively, about N18.25 billion, N14.76 billion, N10.31 billion, and N10.92 billion were taken out.Yobe (N2.1bn), Zamfara (N2.1bn), and Borno (N1.55bn) were the least affected states.It was observed that, with the exception of January and February, the total amount deducted was largely constant throughout the year.
The federal government has not refrained from acquiring loans to cover its expenses in spite of this significant debt servicing.
Moreover, as of December 31, 2023, the total amount of domestic debt was N53.3 trillion, up from N48.3 trillion in June 2023. In the six months, external loans decreased by $664 million ($43.2 million in June and $42.4 million in December); however, the amount increased by $901 million when compared to $41.5 million in September and $42.4 million in December.
Nigeria also spent N7.8 trillion in 2023 to pay down its debt, a 121% increase over N3.52 trillion in the year before.According to an examination of the national debts, the government borrowed N2.29 trillion from the FGN bonds market; as of December 31, 2023, the amount had increased by 5.45% from N41.97 trillion in June 2033 to N44.26 trillion.
In addition, the government took out loans totaling N350 billion from Sukuk, N1.79 trillion from Treasury bills, N8.47 trillion from savings bonds, and N549.02 billion from promissory notes.
The African Development Bank and the Exim Bank of China were the two lenders with the highest borrowing under external debt, totaling $541.5 million.
Nonetheless, the administration of Tinubu pledged to decrease borrowing and put more of an emphasis on raising revenue, which runs counter to the raised debt.