The Federal Government has taken out more than N415 billion from state government funds to pay off their external debts.
This information comes from data in the Federation Account Allocation Committee Disbursement reports released by the National Bureau of Statistics.
These deductions occurred from 2019 to 2023 from the funds allocated to state governments from the Federation Account.
The federation account is currently being operated under a legal structure that divides funds into three main parts: statutory allocation, Value Added Tax distribution, and derivation principle.
An analysis of the report revealed that sub-national deductions were N57bn in 2019, N74bn in 2020, increasing to N86.2bn in 2021, N78bn in 2022, and reaching N120.01bn by December 2023.
This represented a 110% increase, highlighting the country’s significant debt amidst declining revenue.
The report noted that Lagos was the most impacted state by the deductions, with approximately N131.1bn deducted for external debt servicing.
Following Lagos was Kaduna with N45.85bn deducted, and Cross River with N21.59bn deducted.
Other states affected included Oyo (N18.25bn), Rivers (N14.76bn), Ogun (N10.31bn), and Edo (N10.92bn). The states least affected were Borno (N1.55bn), Yobe (N2.1bn), and Zamfara (N2.1bn).
A consistent amount was deducted throughout the year, except for January and February.
Despite this, the federal government continued to borrow money to cover its expenses.
The government borrowed N4.94 trillion from domestic sources in the first six months of President Bola Tinubu’s administration, showing a heavy reliance on loans.
Domestic debts increased by N4.94tn from N48.3tn in June 2023 to N53.3tn by December 31, 2023. External loans decreased by $664 million in the six months, but increased by $901 million compared to the previous period.
In 2023, Nigeria spent N7.8tn to pay off its debts, a 121% increase from the previous year’s N3.52tn.
An examination of the country’s internal debts revealed that the government borrowed N2.29 trillion from the FGN bond market, marking a 5.45% increase from N41.97 trillion in June 2033 to N44.26 trillion by December 31, 2023.
In addition to FGN bonds, the government also borrowed N1.79tn from Treasury bills, N8.47bn from savings bonds, N350bn from Sukuk loans, and N549.02bn from promissory notes.
On the external debt front, there was an uptick in borrowing from the African Development Bank and the Exim Bank of China, totaling $541.5 million in loans.
This surge in debt contradicts the promises made by the Tinubu administration to reduce borrowing and prioritize increasing revenues.
