The Federal government is currently planning to borrow more from the debt markets, and this simply means more money for debt servicing.
According to a report on the DMO’s website, Nigeria’s public debt stood at N19.63 trillion ($54.47 billion) as at June 2017.
The external debt of the two levels of government was N4.6 trillion.
For domestic debt, the Federal government owed N12 trillion and various states governments owed N3 trillion to creditors in Nigeria.
On the resources cost of this huge public debt profile, the Federal government in Q2 2017 spent N253.3 billion ($703.6 million) on domestic debt servicing. More is expected to be allotted for this purpose going forward, as the government frequent debt markets.
Financial experts and policymakers have raised concerns about this huge cost of debt to the country.
Mrs Kemi Adeosun, Nigeria’s Minister of Finance also called for a reduction in the pace at which the country borrows. She stated that huge resources are usually set aside for debt servicing on an annual basis.
"The problem is that we have been relying on oil and oil gave us a big budget size. It is one of our resources and as you know, it's only 10% of our GDP. So, the rest of our economy 90% has to contribute to our revenue,” she said during the Quarterly Presidential Business Forum held on Tuesday, July 11, 2017, at Aso Rock Presidential Villa in Abuja.
“So, what are we trying to do? We need to mobilise additional revenue to fund our budget. We have got to get our budget bigger and to do that we cannot borrow any more. We have to generate more revenue, we have to plug the leakages; we have to improve tax collection so that we can manage our borrowing."
Analysis of government's revenue potentials shows it may be near impossible for the government to implement its developmental plans without approaching the debt markets.
The seeming stability in the global oil market and increase in the oil production provides a glimpse of hope. However, the government must ensure it gives more attention to revenue drive to debt accumulation.