Nigeria’s Federal Government spent a staggering N7.41tn on debt servicing from January to August 2024, exceeding its pro-rata budget by 34.4%. Domestic and foreign debt repayments surged, driven by rising naira depreciation and increased borrowing costs, with foreign debt servicing doubling its allocation. This has significantly constrained capital expenditures, which fell 60.3% below the pro-rata target of N9.18tn. The alarming underperformance in critical sectors, including infrastructure, has raised concerns over Nigeria’s ability to sustain developmental progress.
Out of the N13.77tn allocated for capital projects in 2024, only N3.65tn was utilized by August, leaving a gap of N6.03tn. Particularly affected were government-owned enterprises and multilateral loans for infrastructure, which saw minimal or no funding utilization. Economists have flagged the diversion of resources toward recurrent expenses and debt repayments as a threat to long-term economic stability, as Nigeria grapples with dwindling foreign reserves and mounting fiscal pressures.
At the 30th Nigerian Economic Summit, Budget Minister Abubakar Bagudu outlined a strategy to stabilize the economy through three interconnected budgets, emphasizing agriculture, infrastructure, human capital, and social investment. Innovative reforms, including student loans and mortgage restructuring, aim to mitigate fiscal deficits and boost capital expenditure. However, the success of these measures hinges on improved fiscal discipline and a shift in spending priorities to spur sustainable development.
