Nigeria’s Debt Increases by 75%, Hits N87 Trillion 

According to the Debt Management Office, at the conclusion of the 2023 second quarter, Nigeria’s total public debt was N87.38 trillion.

The amount is up 75.29 percent, or N37.53 trillion, from the N49.85 trillion recorded at the end of March 2023.

According to a report released by the DMO on Thursday, the debt includes the N22.71 trillion in Ways and Means Advances made by the Central Bank of Nigeria to the Federal Government.

The DMO stated, “Nigeria’s total public debt stock as at June 30, 2023, was N87.38 trillion ($113.42 billion). It comprises the total domestic and external debts of the Federal Government of Nigeria, the thirty-six states, and the Federal Capital Territory.

“The major addition to the Public Debt Stock was the inclusion of the N22.712 trillion in securitized FGN’s Ways and Means Advances.”

The statement also mentioned fresh borrowings by the Federal Government and the sub-nationals from domestic and foreign sources, which were added to the debt stock.

It added, “The reforms already introduced by the present administration and those that may emerge from the recommendations of the Fiscal Reform and Tax Policies Committee, are expected to impact debt strategy and improve debt sustainability.”

Following the National Assembly’s approval of the request by the previous president, Muhammadu Buhari, to restructure the CBN’s Ways and Means Advances, the DMO had earlier predicted that Nigeria’s public debt load may reach N77 trillion.

The CBN uses a borrowing instrument called the Ways and Means Advances to cover budgetary gaps in the government.

The Director-General of the DMO, Patience Oniha, during a public presentation of the 2023 budget organised by the former Minister of Finance, Budget and National Planning, Dr. Zainab Ahmed, noted that the debt would be N70tn without N5tn new borrowing and N2tn promissory notes.

However, according to the most recent data, the DMO’s prediction was N10.38 trillion lower than the current debt stock of N87.38 trillion.

Additional analysis revealed that Nigeria’s total domestic debt is N54.13 trillion and its total external debt is N33.25 trillion.

According to the office, the projected government’s debt service-to-revenue ratio of 73.5 percent for 2023 is high and a threat to debt sustainability.

It noted that the government’s current revenue profile could not support higher levels of borrowing.

In a report titled ‘Report of the Annual National Market Access Country Debt Sustainability Analysis (DSA),’ the debt office said, “The projected FGN Debt Service-to-Revenue ratio of 73.5 percent for 2023 is high and a threat to debt sustainability.

“It means that the revenue profile cannot support higher levels of borrowing. Attaining a sustainable FGN Debt Service-to-Revenue ratio would require an increase of FGN Revenue from N10.49 trillion projected in the 2023 Budget to about N15.5 trillion.”

According to DMO, in order to raise the country’s tax revenue to GDP ratio from roughly 7% to that of its peer, the government must pay attention to revenue generation by implementing comprehensive revenue mobilisation initiatives and reforms, including the Strategic Revenue Growth Initiatives and all of its pillars.

The DMO predicted that when the Federal Government approaches its 40% self-imposed debt ceiling, it won’t be able to borrow more.

The DMO stated that the government should encourage the private sector to fund some of the capital projects that are being financed by borrowing through the public-private partnership schemes in order to minimise borrowing and the budget deficit.

The Federal Government can cut borrowing by selling or privatising government assets, it was claimed.