Nigeria’s public debt has escalated to 40.6 percent of its gross domestic product, prompting the Nigerian Economic Summit Group (NESG) to issue a warning about the persistent fiscal risks facing the country. The NESG emphasizes that unless there is a rebalancing of revenue generation and spending, Nigeria may encounter significant economic challenges.
In its latest economic review released in Abuja, the NESG noted that while the debt-to-GDP ratio remains below certain international thresholds, the accelerating cost of servicing this debt poses a threat to macroeconomic stability. The group attributes the increasing debt burden to a growing dependence on borrowing amid weak domestic revenue collection. The NESG stated, “Debt-sustainability concerns remain elevated because of fragile revenue performance and rising debt-service obligations.” To address these issues, the group urged fiscal authorities to expand the revenue base, tighten expenditures, and implement reforms aimed at diversifying income sources away from oil.
Key recommendations from the NESG include intensifying efforts to enhance non-oil revenue, improving tax administration, and creating a conducive environment for private-sector investment. The group warns that without these measures, continued borrowing could worsen fiscal pressures and limit the government’s ability to finance essential public services.
Furthermore, the NESG highlighted broader macroeconomic challenges that could exacerbate the debt situation. Persistent inflation, volatility in the foreign exchange market, and sluggish productivity growth were identified as risks that, if unaddressed, may undermine investor confidence and hinder long-term growth prospects.
According to the review, the consistent implementation of both fiscal and monetary policies is crucial for restoring investor confidence and achieving sustainable growth. The group urged the federal government to maintain a coordinated policy approach, emphasizing that credible fiscal discipline and prudent debt management are vital for safeguarding the nation’s economic outlook.
As Nigeria navigates a period of increased fiscal vulnerability, the NESG’s alert underscores the urgent need for policy action to enhance revenue mobilization, limit unnecessary borrowing, and tackle structural impediments to growth. The organization will continue to monitor debt dynamics and provide policy guidance as the situation develops.
