National Debt Increases by N1.22trn, Hits N44trn
Nigeria’s public debt rose by N1.22 trillion in the third quarter of 2022. This increase, which brings the nation’s total public debt to N44.06 trillion, is driven by new borrowings by the Federal Government to part-finance the deficit in the 2022 Appropriation Act, alongside new borrowings by sub-nationals.
Already Nigeria is groaning under the burden of debt service which is taking a lion share of the nation’s revenue.
According to a press statement published on the website of the Debt Management Office (DMO) on Friday, the total public debt stock rose from N42.84 trillion recorded in the second quarter to N44.06 trillion in Q3, 2022.
This showed that there was a 2.85 per cent increase quarter-on-quarter and Nigeria acquired N1.22 trillion debt within three months.
DMO also noted that the total public debt stock consists of domestic debt of N26.92 trillion and external debt of N17.15 trillion.
According to the statement, “Total public debt stock which comprises the total domestic and external debt stock of the Federal Government of Nigeria, all State Governments and the Federal Capital Territory stood at N44.06 trillion.
“In comparison, the total public debt figure as of June 30, 2022, was N42.84 trillion. The total domestic stock as of September 30, 2022, was N26.92tn while the total external debt stock as of September 30, 2022, was N17.15 trillion.
“The increase in the debt stock was largely due to new borrowings by the Federal Government to part-finance the deficit in the 2022 Appropriation Act, as well as, new borrowings by sub-nationals.”
The World Bank recently said that Nigeria’s debt, which may be considered sustainable for now, was vulnerable and costly.
According to the Washington-based global financial institution, the country’s debt is also at risk of becoming unsustainable in the event of macro-fiscal shocks.
The bank had said, “Nigeria’s debt remains sustainable, albeit vulnerable and costly, especially due to large and growing financing from the Central Bank of Nigeria.
“While currently the debt stock of 27 per cent of the Gross Domestic Product is considered sustainable, any macro-fiscal shock can push debt to unsustainable levels.
“However, the debt to the GDP in Nigeria is rising quickly, and the total stock of debt in absolute value has almost doubled between 2016 and 2020, and without a policy change is expected to reach 40 per cent of the GDP by 2025.”
The bank further expressed concerns over the nation’s cost of debt servicing, which according to it, disrupts public investments and critical service delivery spending.
Speaking at the launch of the World Bank’s Nigeria Development Update titled, ‘The urgency for business unusual,’ the Minister of Finance, Zainab Ahmed, had admitted that Nigeria was struggling to service its debt.
She said, “Already, we are struggling with being able to service debt because even though revenue is increasing, the expenditure has been increasing at a much higher rate, so it is a very difficult situation.”
A Professor of Development Macroeconomics at the University of Lagos, Prof Olufemi Saibu, criticised the government for over-borrowing.
He said, “I think we are over-borrowing. We continue to rely on international benchmarks, which make us lazy in terms of revenue generation.”
Prof Saibu urged the government to lessen its huge expenditure costs and channel money into more productive sectors of the economy.
He said, “With our current heavy infrastructure debt financing and the low productivity in the local economy, the government needs to find a way of reducing its expenditures. We need to redirect the government’s finances to areas that are productive and borrow less for consumption.”