The Federal Government has deducted over N415bn from state government allocations to service their external loans, according to findings.
This was according to data from the Federation Account Allocation Committee Disbursement reports published by the National Bureau of Statistics.
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 N57bn in 2019, N74bn in 2020, before increasing to N86.2bn in 2021, N78bn in 2022 and N120.01bn 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 N131.1bn deducted for external debt servicing.
It was followed by Kaduna with N45.85bn deducted, and Cross River with N21.59bn deducted.
About N18.25bn, N14.76bn, N10.31bn and N10.92bn were deducted from Oyo, Rivers, Ogun and Edo respectively.
The least affected states were Borno (N1.55bn), Yobe (N2.1bn) and Zamfara (N2.1bn).
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.
It was reported that the Government borrowed a total sum of N4.94tn 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 N4.94tn from N48.3tn recorded in June 2023 to N53.3tn as of December 31, 2023. Although external loans reduced by $664m in the six months ($43.2m in June and $42.4m in December), the figure increased by $901m when compared with $41.5m in September and $42.4m in December.
Also, Nigeria spent a sum of N7.8tn to service its debt obligations in 2023, a 121 per cent increase compared to N3.52tn incurred in the previous year.
An analysis of the domestic debts showed that the government borrowed N2.29tn from the FGN bonds market with the figure increasing by 5.45 per cent from N41.97tn recorded in June 2033 to N44.26tn as of December 31, 2023.
The government also borrowed N1.79tn from treasury bills, N8.47bn from savings bonds, N350bn in Sukuk loans, and N549.02bn 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 $541.5m.
The increased debt is, however, contradictory to promises made by the Tinubu administration to reduce borrowing and focus more on increasing revenues.