Nigeria TV Info 

States, FCT External Debt Nears $5.7bn Despite Rising FAAC Allocations

The combined external debt owed by Nigeria’s 36 states and the Federal Capital Territory (FCT) has climbed close to $5.7 billion, raising fresh concerns about fiscal sustainability despite increased monthly allocations from the Federation Account Allocation Committee (FAAC).

Latest fiscal data indicates that several state governments have continued to rely on foreign loans to finance infrastructure projects, salary obligations, healthcare, education, and other developmental needs. Analysts say the growing debt profile comes at a time when FAAC disbursements have significantly improved following fuel subsidy removal and exchange rate reforms introduced by the Federal Government.

Economic experts argue that although higher FAAC revenues were expected to ease financial pressure on states, many sub-national governments still struggle with weak internally generated revenue, rising recurrent expenditure, and inflation-driven costs. Some states reportedly spend a large portion of their allocations servicing debts and paying workers’ salaries.

The debt increase has also been linked to ongoing foreign-funded projects supported by international financial institutions such as the World Bank, African Development Bank, and other development partners. While state governments insist that the loans are tied to critical infrastructure and social intervention programmes, financial observers warn that excessive borrowing could create long-term repayment challenges, especially with the continued depreciation of the naira.

Citizens and civil society groups have called for greater transparency in loan utilisation and stronger fiscal discipline among state governments. They also urged authorities to channel rising FAAC earnings into productive sectors capable of generating sustainable economic growth and employment opportunities.

Meanwhile, the Federal Government has repeatedly advised states to improve revenue generation, reduce dependence on borrowing, and invest more in agriculture, manufacturing, and small businesses to strengthen local economies.