Relatively modest external debt service – FBNQuest – Blueprint Newspapers Limited

Although Nigeria’s debt service-to-revenue ratio has frequently exceeded 90% in recent quarters; the proportion of external debt servicing costs is still relatively low, as much of the external debt burden (60%) is owed to concessional lenders such as the World Bank, according to FBNQuest Research.

The DMO’s latest quarterly external debt service publication shows that the FGN’s external debt service obligations stood at $ 521 million in the third quarter of 2021. The sum consists of $ 246 million and $ 275 million dollars on market and non-market debt respectively. The amount is broadly comparable to the cost of servicing the external debt of $ 507 million for the comparable quarter of 2020. However, it is about 74% higher on a quarterly basis (t / t) because the service payments debt tend to peak. in the third (and first) quarter due to a concentration of FGN bond issues during these quarters.

FGN’s external debt service payments for a nine-year period ending in 2021 totaled $ 1.8 billion (including a $ 500 million due in January 2021), up from around $ 1.3 billion. for the period of the previous year.

“Based on the annual interest and fee payments over the nine months through September 2021 and the stock of

debt at the end of September, we calculate the average cost of borrowing from the World Bank Group at 1.3%, the African Development Bank Group at 1.4% and the Exim Bank of China at 3, 5%, ”he said.

For FGN commercial bonds, the average is around 6.9%.

Principal repayments in the third quarter totaled $ 172 million, including $ 77 million to the World Bank Group and $ 58 million to the Exim Bank Of China.

“We see from the DMO data for September 20’21 that Nigeria’s total stock of external debt was 41% of the total public debt of just over 38 trillion naira, while servicing external debt represented only 21% of total debt service. .

The stock of external debt is expected to widen further, as the newly approved budget for FY2022 projects total expenditure of N17.1 trillion and a deficit of N.6.4 trillion, of which N11 trillion is from internal and external loans.

Shirlene J. Manley