THE World Bank, in its latest report, says Nigeria spent 96.3 per cent of its 2022 revenue on servicing its debts.
The World Bank gave this information in its report on Macro Poverty Outlook for Nigeria, released in April 2023.
The report noted that Nigeria’s fiscal position deteriorated in 2022, leaving the cost of petrol subsidy to increase from 0.7 per cent to 2.3 per cent of the gross domestic product (GDP).
“This has kept the public debt stock at over 38 per cent of GDP and pushed the debt service to revenue ratio from 83.2 per cent in 2021 to 96.3 per cent in 2022,” it read.
The report stated that the fiscal deficit was estimated at 5.0 per cent of the GDP in 2022, breaching the stipulated limit for a federal fiscal deficit of 3 per cent.
The report stated that oil price booms had supported the country’s economy, but this has changed since 2021.
The cause for this included macroeconomic stability weakening amidst declining oil production, costly fuel subsidies, exchange rate distortions, and monetisation of the fiscal deficit.
“In 2022, oil revenues, the fiscal deficit outturn, FX reserves, and economic growth decoupled from the cycle of higher global oil prices. GDP growth decelerated from 3.6 per cent in 2021 to 3.3 per cent in 2022.
“Growth was driven by manufacturing, construction, and most services. In contrast, the oil sector shrank by 19.2 per cent. From the demand side, growth was driven by private consumption and investment.”
It also revealed that the deteriorating economic environment was leaving millions of Nigerians in poverty, resulting in risks tilting to the downside, given the lack of macro-fiscal reforms, the naira demonetisation, and an uncertain external outlook.
In a similar submission, the International Monetary Fund (IMF) in February said the Federal government has projected to spend 82 per cent of its revenue on interest payments in 2023.
According to the IMF, external debts (including those of the private sector) would rise to $121.6 billion, with external reserves climbing to $37.5 billion.
It disclosed this in a table of projections in its ‘IMF Executive Board Concludes 2022 Article IV Consultation with Nigeria summary.’
The projections showed an improvement in the share of the government’s revenue that was being used as interest payment, with interest payment falling from 96.3 per cent in 2022 to 82 per cent in 2023.
It added that interest payment was 86.1 per cent and 87.8 per cent of the Federal government’s revenue in 2020 and 2021 respectively.
The minister of Finance, Zainab Ahmed, said the Federal government spent 41 per cent of the revenue generated in 2022 to service its N44.06 trillion debt.
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.