Nigeria’s Public Debt Skyrockets by 75%, Reaches N87 Trillion in 3 Months
In a startling development, Nigeria’s public debt has surged by a staggering 75.29% within just three months, skyrocketing to a record-high of N87.38 trillion by the end of the second quarter of 2023. This sharp increase, compared to the N49.85 trillion recorded at the end of March 2023, has raised significant concerns about the nation’s financial stability.
The Debt Management Office (DMO) revealed that this unprecedented debt figure includes N22.71 trillion in Ways and Means Advances provided by the Central Bank of Nigeria (CBN) to the Federal Government. These advances serve as short-term loans to cover budgetary shortfalls.
The DMO clarified, “Nigeria’s total public debt stock as of June 30, 2023, stood at N87.38 trillion ($113.42 billion), encompassing the combined domestic and external debts of the Federal Government of Nigeria, the 36 states, and the Federal Capital Territory.”
This surge in debt can be attributed to new borrowings by both the Federal Government and state governments from various sources, surpassing the DMO’s earlier projection of N77 trillion.
A detailed breakdown of the debt reveals N54.13 trillion in domestic debt, constituting 61.95% of the total, and N33.25 trillion in external debt, representing 38.05%. Notably, both domestic and external debt levels have surged significantly within a mere three-month period.
The DMO had previously cautioned that Nigeria’s projected revenue of N10 trillion for 2023 would not suffice to support additional borrowing. The debt service-to-revenue ratio, projected at 73.5% for 2023, has sparked concerns about the nation’s ability to sustain such levels of debt, necessitating a substantial increase in government revenue to maintain fiscal stability.
Economic experts emphasize the critical importance of evaluating the reasons behind this escalating debt, stressing the need for investments that drive productivity and enhanced revenue generation, rather than relying on borrowing for non-productive purposes. Nigeria’s burgeoning debt burden, if left unaddressed, could adversely impact the country’s future economic growth and stability.
To tackle revenue challenges and manage the mounting debt, experts recommend a comprehensive approach, including measures such as fuel subsidy removal, exchange rate stabilization, and the implementation of tax reforms to boost Nigeria’s revenue base. Additionally, a reduction in the cost of governance has been suggested as a means to ensure fiscal sustainability.
In summary, Nigeria’s alarming increase in public debt demands a multifaceted strategy to address revenue shortfalls and effectively manage the growing financial burden confronting the nation.