Concerns as Nigeria’s debt-to-GDP ratio crosses 50 per cent

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When last month, the Debt Management Office (DMO), announced that Nigeria’s public debt had hit N121.67 trillion, made up of N65.65 trillion ($46.29 billion) total domestic debt

When last month, the Debt Management Office , announced that Nigeria’s public debt had hit N121.67 trillion, made up of N65.65 trillion total domestic debt and N56.02 trillion external debt, there was general feeling that the country would be crippled by debt.

In fact, in the first quarter of 2024, the federal government was said to have generated only N318.5 billion as against a total budget of N2.69 trillion for the period. This is according to a statement attributed to the Office of Accountant General of the Federation, which added that reconciliation was still ongoing.

DMO states: “Under the alternative scenario, the total public debt-to-GDP ratio at 45.4 per cent in 2023 exceeds Nigeria’s self-imposed debt limit of 40 per cent.” “Eurobond repayments account for another significant portion, 25 per cent of the total external debt cost, equating to $282.6 million. Payments to the Export and Import Bank of China and the International Development Association account for 16 per cent and 18 per cent , respectively,” the analysts noted.

He noted that even a moderate debt-to-GDP ratio can be problematic if a country struggles to generate enough revenue to service its debt . He noted that the economy has been mismanaged through rudderless policies, intervention frameworks not based on empirical evidence and outright corruption.

 

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