Nigeria’s Public Debt Stock Projected to Hit N130tn, Raising Concerns About Debt-to-GDP Ratio
Nigeria’s public debt stock is expected to reach N130 trillion by the end of this year, according to a report by Afrinvest, an investment management company. This projection has raised concerns about the country’s debt-to-gross domestic product (GDP) ratio, which is expected to exceed 55% by year-end.
As of the first quarter of 2024, Nigeria’s public debt stock stood at N121.67 trillion, comprising N77.5 trillion in domestic debt and N44.2 trillion in external debt. The domestic debt includes N44.8 trillion in Federal Government bonds, N20.3 trillion in Treasury bills, and N12.4 trillion in other domestic debt.
The external debt is made up of N14.3 trillion from multilateral creditors, N10.9 trillion from bilateral creditors, and N19.0 trillion from commercial creditors.
Afrinvest’s report also expressed concerns about the 2024 budget, which is based on "overly optimistic" revenue assumptions. The report stated that the expectation of a 43.9% share of projected revenue from oil and other minerals is unrealistic. The report also noted that the Federal Government’s expansive borrowing plan could negatively impact banks’ deposits and lead to heightened risks of asset deterioration.
The report praised the Central Bank of Nigeria’s efforts to streamline the number of Bureau De Change operators and improve forex management. However, Afrinvest warned that the weak forex reserve war chest could lead to market volatility.
To address these concerns, Afrinvest recommended exploring alternative sources of forex, such as bilateral loans, natural resource-tied loans, debt-for-nature swaps, and asset concessions. The report also emphasized the need for supportive fiscal policies to revitalize traditional forex inflow sources, including oil production, remittances, and foreign portfolio investment.
As Nigeria’s public debt stock continues to rise, it is essential for the government to take decisive action to address these concerns and ensure sustainable economic growth.
