Global ratings agency, Moody’s, has stated that in 2024, Nigeria will spend about 36 per cent of its revenue on interest spending on debt.
In a review of the Nigerian economy, the firm noted that the country’s credit outlook was positive, citing the sustenance of reforms instituted in 2023.
It further pointed out that the hawkish monetary policy stance of the CBN has pushed interest rates for local borrowing by the federal government from an average of 12.8 per cent in 2023 to around 19 per cent in the first five months of 2024.
“Tighter monetary conditions are pushing government interest rates for local currency borrowing to higher levels, from an average of 12.8% in 2023 to 19.7% between January and May 2024. As the government is predominantly borrowing in domestic markets, this will have a significant impact on interest spending, which we expect will increase by 1 percentage of GDP in 2024 and consume 36% of government revenue.”
Moody’s further stated that implicit fuel subsidy payment due to the devaluation of the naira which increased the cost of fuel import, would put pressure on the government’s spending.
According to the report, fuel subsidy payments would remain high in the year but likely to gradually decrease, and that beyond 2024, it is uncertain in its outlook for the country despite an increase in oil production.
