By Juliet Jacob
The Debt Management Office, DMO, on Thursday revealed that Nigeria’s total public debt stock increased to N46.25tn or $103.11bn in the fourth quarter of 2022.
The latest figure has made members of the organised private sector and economists to predict tougher days ahead for Nigerians and firms. The national debt as of September, 2022, was put at N44.06tn.
According to the office, the new figure 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.
DMO stated that the comparative figure of public debt as of December 31, 2021, was N39.56tn or $95.77bn.
This means the country’s debt increased by N6.69trn or $7.34bn within one year.
Stating reasons for the increase, DMO said new borrowings by the FGN and sub-national governments, primarily to fund budget deficits and execute projects and the issuance of promissory notes to settle some liabilities also contributed to the growth in the debt stock.
The statement read in part, “As of December 31, 2022, the total public debt stock was N46.25tn or $103.11bn. In terms of composition, total domestic debt stock was N27.55tn ($61.42bn) while total external debt stock was N18.70tn ($41.69bn).
“Amongst the reasons for the increase in the total public debt stock were new borrowings by the FGN and sub-national governments, primarily to fund budget deficits and execute projects. The issuance of promissory notes by the FGN to settle some liabilities also contributed to the growth in the debt stock.
“On-going efforts by the Government to increase revenues from oil and non-oil sources through initiatives such as the Finance Acts and the Strategic Revenue Mobilization initiative are expected to support debt sustainability.”
DMO 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.
According to DMO, “The total public debt to gross domestic product (GDP) ratio for December 31, 2022, was 23.20 per cent and 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.”
Reacting, the Director, Center of Promotion for Private Enterprise, Muda Yusuf, expressed concern over the multiplier effect of the latest debt figure, stating that the country would continue to struggle with servicing of debts if drastic steps were not taken.
He said, “What this means is that the country will continue to struggle with servicing of debts. Already, debt service is close to 80 per cent of our revenue and it is likely to increase with the new figure.
“The implication is that we are likely to get ourselves into a vicious cycle of debt, like a debt trap because the higher debt service burden is, when your revenue is low, the more you continue to borrow to be able to sustain the system. Remember that the N23tn from the Central Bank of Nigeria (CBN) Ways and Means is not part of this. If we add that, it will make it almost N80tn.
On possible solutions, Yusuf stated that removal of fuel and foreign exchange subsidy would increase the nation’s revenue.
“A possible solution is to increase our revenue through the removal of fuel subsidy and foreign exchange subsidy. This will bring relief of N8trn. We also have to address increasing oil production, curb leakages, cut our spending,” he added.
