The Federal Government has deducted over N415 billion from state government allocations to service their external loans, according to findings by The PUNCH.
This was according to data from the Federation Account Allocation Committee (FAAC) Disbursement reports published by the National Bureau of Statistics (NBS).
The deductions were made between 2019 and 2023 from the allocations given to state governments from the Federation Account.
The federation account is currently being managed under a legal framework that allows funds to be shared under three major components: statutory allocation, Value Added Tax distribution and derivation principle.
An analysis of the report showed that the deductions incurred by the sub-nationals were N57 billion in 2019, N74 billion in 2020, before increasing to N86.2 billion in 2021, N78 billion in 2022 and N120.01 billion as of December 2023. The figure indicated an increase of 110 per cent, signalling the country’s huge debt amidst dwindling revenue.
It was observed that the most hit state by the deductions was Lagos, with about N131.1 billiom deducted for external debt servicing.
It was followed by Kaduna with N45.85 billion deducted, and Cross River with N21.59 billion deducted.
About N18.25 billion, N14.76 billion, N10.31 billion and N10.92 billion were deducted from Oyo, Rivers, Ogun and Edo respectively.
The least affected states were Borno (N1.55 billion), Yobe (N2.1 billion) and Zamfara (N2.1 billion).
The PUNCH noted that the total amount deducted was mostly fixed throughout the year except for January and February.
Despite this heavy debt servicing, the federal government has not restrained from obtaining loans to service its expenditures.
Sunday PUNCH reported that the Government borrowed a total sum of N4.94 trillion from domestic sources in the first six months of the administration of President Bola Tinubu, indicating significant dependence on loans.
It observed that the domestic debts rose by N4.94 trillion from N48.3 trillion recorded in June 2023 to N53.3 trillion as of 31 December 2023. Although external loans reduced by $664 million in the six months ($43.2 million in June and $42.4 million in December), the figure increased by $901 million when compared with $41.5 million in September and $42.4 million in December.
Also, Nigeria spent a sum of N7.8 trillion to service its debt obligations in 2023, a 121 per cent increase compared to N3.52 trillion incurred in the previous year.
An analysis of the domestic debts showed that the government borrowed N2.29 trillion from the FGN bonds market with the figure increasing by 5.45 per cent from N41.97 trillion recorded in June 2033 to N44.26 trillion as of 31 December 2023.
The government also borrowed N1.79 trillion from treasury bills, N8.47 billion from savings bonds, N350 billion in Sukuk loans, and N549.02 billion from promissory notes.
Under external debt, increased borrowing was observed from the African Development Bank and the Exim Bank of China, with a total loan of $541.5 million.
The increased debt is, however, contradictory to promises made by President Tinubu’s administration to reduce borrowing and focus more on increasing revenues.
