THE Debt Management Office (DMO) revealed today that Nigeria’s total public debt stock increased to N46.25 trillion, or $103.11 billion, in the fourth quarter of 2022.
The new figure, according to a statement by the DMO, consists of the domestic and external total debt stocks of the federal government and the sub-national governments (36 state governments and the Federal Capital Territory).
A report by The ICIR on January 18 had projected that every Nigerian would be owing N384,864 each when President Muhammadu Buhari leaves office on May 29, as the debt profile was expected to spiral to N77 trillion by the end of his administration.
The DMO confirmed that the national budget is largely funded through borrowing. Sub-nationals also rely so much on both domestic and foreign debts to drive some of their major projects.
On Tuesday this week, the Federal House of Representatives informed that the China Development Bank had rejected Nigeria’s $22,798,446,773 loan request earlier approved by the National Assembly. Experts fear this development could distort funding of projects outlined in the 2023 fiscal year.
An economist also warned that such persistent borrowing puts Nigeria’s currency at devaluation risk and heightens inflationary pressure.
“There is a strong link between ballooning debt, weak exchange rate, and Nigeria’s rising hyper inflation. This is already taking its toll on Nigeria’s assesment by global rating agencies like Fitch and Moody. The worst of it all is that indigenous companies quoted on the Nigeria Exchange Limited are also donwgraded,” a development economist, Kelvin Emmanuel, told The ICIR.
According to the DMO, the comparative figure of public debt by December 31, 2021 was N39.56 trillion, or $95.77 billion.
By implication, the country’s debt increased by N6.69 trillion, or $7.34 billion within one year.
The DMO cited reasons for the debt rise to include new borrowings by the Federal government and sub-national governments, primarily to fund budget deficits and execute projects, and the issuance of promissory notes to settle some liabilities.
“Ongoing efforts by the government to increase revenues from oil and non-oil sources through initiatives such as the Finance Act and the Strategic Revenue Mobilization initiative are expected to support debt sustainability,” the DMO stated.
It further explained that the debt figure under review was 23.20 per cent of the gross domestic product, indicating that it was well within the limits set by both the federal government and international organisations.
“The total public debt-to-gross domestic product (GDP) ratio for December indicates a slight increase from the figure for December 31, 2022, at 22.47 per cent.
“The ratio of 23.20 per cent is within the 40 per cent limit self-imposed by Nigeria, the 55 per cent limit recommended by the World Bank/International Monetary Fund, and the 70 per cent limit recommended by the Economic Community of West African States,” the DMO said.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.