President Bola Tinubu has submitted a fresh external borrowing proposal to the National Assembly, requesting approval for N1.767trillion under the 2024 appropriation act.

The loan, if approved, is intended to partly finance the N9.7trillion budget deficit for the year.

The request was presented to lawmakers during Tuesday’s plenary by the Speaker.

Additionally, the President has forwarded the Medium-Term Expenditure Framework (MTEF) for 2025-2027 and the National Social Investment Programme Establishment Amendment Bill.

This bill seeks to establish the social register as the primary tool for implementing the federal government’s social welfare initiatives.

Meanwhile, the Central Bank of Nigeria (CBN) revealed that the Federal Government spent $3.58bn servicing its foreign debt in the first nine months of 2024. This figure marks a 39.77% rise from the $2.56bn spent in the same period in 2023.

The highest debt servicing payment in 2024 occurred in May, amounting to $854.37m, a 286.52% increase compared to May 2023. The CBN data further highlights significant fluctuations in debt servicing costs, with notable increases in early 2024.

For instance, January saw a dramatic 398.89% surge in payments, while February saw a slight decline. The monthly debt servicing pattern reflects Nigeria’s rising financial strain due to increasing debt obligations.

The federal government’s growing debt burden is further underscored by the recent report from Channels Television, which indicated a rise in the collective debts of Nigeria’s 36 states.

By June 2024, the states’ total debt had risen to N11.47tn, a 14.57% increase from December 2023. External debt also saw an uptick, climbing from $4.61bn to $4.89bn in the same period.

This increase is largely attributed to the devaluation of the naira, which has raised the debt burden in naira terms.

Despite these rising figures, domestic debt for the states and the Federal Capital Territory (FCT) showed a decline. The overall public debt, including that of the states, reached N134.3tn by June 2024, a decrease from their share in December 2023.

However, the trend of increasing foreign debt amid domestic fiscal challenges continues to exacerbate Nigeria’s debt servicing burden.

The report from BudgIT further reveals that many states are heavily reliant on federal allocations, with 32 states depending on the Federation Account Allocation Committee (FAAC) for at least 55% of their revenue.

This dependency poses a challenge to fiscal sustainability, as fluctuations in oil revenue or external shocks could significantly impact the financial stability of the states.

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