The decline in the value of the Naira to the US dollar has increased the burden of servicing external debts for federal and state governments.
According to the Debt Management Office (DMO) at the end of March 2022, the total federal government’s external debt stood at $39.69 billion.
The external debt obligation of the 36 subnational governments and the Federal Capital Territory Abuja stood at $4.77 billion as of December 2021.
At an exchange rate of N416.63/$ in March 2022, the Naira equivalent of federal government external debt was at N15.3 trillion.
Today, with the official exchange rate at N430.67, the debt has increased to N15.89 trillion, meaning N518 billion has been added to the debt burden.
For the state’s external debt Naira equivalent has increased from N1.98 trillion it stood in March 2022 to N2.05 trillion as at August 2, 2022.
This is an additional N70 billion debt service burden.
Recently, Zainab Ahmed, minister of finance, budget and national planning, defended the current level of Nigeria’s debt level, reiterating that the debt-to-GDP ratio, which is at 23.3 per cent, remains very sustainable, and all that is needed is to boost revenue.