FGN's External Debt Service Obligations Reached a Total of US$507m in Q3 2020


Friday, January 15, 2021 / 10:34 AM / by FBNQuest Research / Header Image Credit: Unsplash


Debt service on the FGN's external obligations reached a total of USD507m in Q3 '20, divided between USD263m and USD244m on market and non-market debt respectively. The market figure was the same as in Q3 '19 and Q1 '20 because the FGN has not issued Eurobonds, which pay semi-annual coupons, since November 2018. The burden should be comfortable for an oil exporter on the scale of Nigeria, which has a quota of 1.52mbpd for Q1 '21 under the latest OPEC+ agreement, particularly when we allow for the current firmness of the crude price. The strains emerge when we view debt service in the context of FGN revenue rather than of oil export earnings.


The detailed reports of the Budget Office of the Federation show that total debt service of NGN1.57trn in H1 '20 covered 95% of total FGN inflows. The ratio appears even worse than usual because the lockdown in response to the Covid-19 virus constrained revenue in the period and because collection tends to gather momentum in the second half. By way of comparison, debt service of NGN2.45trn represented 59% of inflows in 2019.


The approved 2021 budget has total debt service at NGN3.32trn, equivalent to 42% of total revenue. We suspect that, not for the first time, the FGN's revenue projections will prove overly hopeful, and that the ratio will therefore come out rather worse than implied by its budget.


Based upon annual interest and fee payments in the 12 months to end-September, and the stock of external debt as at end-March, we calculate the average borrowing cost from the World Bank Group at 1.1%, the African Development Bank Group at 2.0% and Exim Bank of China at 2.7%. For the FGN's market (commercial) obligations, the average comes out at 7.5%.


In April '20 the FGN borrowed SDR2.5bn (currently USD3.6bn) from the IMF under its rapid financing instrument to tackle external shocks (the virus in this case). Repayments of principal start in 2023 and run through until 2025. The credit, unlike its traditional arrangements, comes without the Fund's conditionality, which explains why the FGN drew down the facility.


Repayments of principal in Q3 '20 came to USD144m, notably USD59m for the World Bank Group and USD58m for Exim Bank of China.


Total external debt service (FGN and states: USD millions)

Proshare Nigeria Pvt. Ltd.

Sources: Debt Management Office (DMO); FBNQuest Capital Research

Proshare Nigeria Pvt. Ltd.

Related News 

  1. 62.18% of Nigeria's Total Public Debt as of Q3 2020 Was Domestic - NBS
  2. FGN's Domestic Debt Service on a Plateau, Totalled N604bn in Q3 2020
  3. FGN's Domestic Debt Service on a Plateau, Totalled N604bn in Q3 2020
  4. A Small Rise in the FGN's Domestic Debt in Q3 2020
  5. Nigeria's Public Debt Stock as of September 30, 2020 Stood at N32.22trn
  6. External Debt Service Under Control 
  7. New Issuance, New Debt Service 
  8. External Debt Almost Two-thirds Concessionary 
  9. Nigeria's Total Public Debt Stood At N31.01trn in Q2 2020 - NBS 
  10. Nigeria's Public Debt Stock Stood At N31.01trn As of June 2020 
  11. External Debt Stock Flat in Q1 2020 
  12. Q1 2020: Debt Service Settled on a Plateau 
  13. Nigeria's Total Public Debt Stood At N28.63trn in Q1 2020 - NBS 
  14. Nigeria's Total Public Debt Stood At N27.40trn in Q4 2019 - NBS 
  15. Nigeria's Rising Debt Burden and How to Boost Revenue 
  16. Nigeria's Total Public Debt Stood At N26.14trn in Q3 2019 - NBS 
  17. Nigeria's Total Public Debt Stood At N25.70trn in Q2 2019 - NBS 
  18. Nigeria's Total Public Debt Stood At N24.97trn in Q1 2019 - NBS 
  19. DMO Releases Q1 2019 Public Debt Data - Marginal Increase of 2.3% in Total Public Debt Recorded 
  20. DMO Releases Public Debt Data for December 2018 
  21. Nigeria's Total Public Debt Stock Stood At $73.21bn or N22.43trn in Q3 2018 
  22. DMO Releases Public Debt Data for June 2018; FGN Domestic Debt Declines 
  23. Public Debt Vulnerable to Exchange Rate Movements 
  24. DMO Publishes Q1 2018 Debt Data; Total Public Debt Stood At N22.71trn or US$74.28bn 
  25. Total Public Debt as at December 31, 2017 Represents 18.20% of Nigeria's GDP for 2017 - DMO 
  26. Nigerian Public Debt - A Comparative Analysis 

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

Related News