Nigeria’s public debt reached N87.38tn at the end of Q2 2023, marking a significant increase of 75.29% compared to N49.85tn recorded at the end of Q1 2023. This surge in debt includes N22.71tn in Ways and Means Advances from the Central Bank of Nigeria to the Federal Government. The Debt Management Office (DMO) reported this substantial debt growth, attributing it to new borrowings by the government and sub-national entities from various sources.
The DMO had previously projected that Nigeria’s public debt could reach N77tn following the restructuring of the Central Bank’s Ways and Means Advances. However, the current figure of N87.38tn exceeds the DMO’s earlier projection by N10.38tn, indicating a more substantial increase than anticipated.
Nigeria’s public debt is composed of N54.13tn in domestic debt and N33.25tn in external debt. While domestic debt makes up 61.95% of the total, external debt accounts for 38.05%. Both domestic and external debt witnessed significant growth within just three months.
In light of this increasing debt burden, the DMO has emphasized the importance of revenue generation and fiscal reforms to support the country’s debt sustainability. The government must focus on initiatives and reforms aimed at boosting revenue and reducing the reliance on borrowing for public spending. While Nigeria faces economic challenges due to its high debt, the DMO believes that the structure of its debt, primarily owed to multilateral bodies and with extended repayment periods, mitigates some of the associated risks.
The government has also recognized the need for reforms to enhance revenue and business environments, aiming to address the revenue shortfall and reduce the debt-service burden in the future.
The depreciation of the Nigerian naira, new borrowings, and the repayment of debts, particularly for subsidies, have contributed to the rapid growth in Nigeria’s public debt. Experts stress the importance of borrowing for productive purposes that stimulate economic growth and generate revenue, as opposed to borrowing for consumption and unproductive expenditures. The government’s ability to manage its debt and raise revenue will play a critical role in shaping Nigeria’s economic future.Source
Visit thedailycourierng for more news