NIGERIA’S DEBT RISING FAST UP BY ₦24.33TRN IN THREE MONTHS

The Nigeria’s total public debt stock was N3.37 trn in 1999, increased to N46.25 trn in 2022, N97.34 trn in 2023, and now to N121.67 trn in 2024'Q1.

Recent rise attributable to new borrowing, currency devaluation and securitisation of ways & means.

External component of Nigeria’s debt is gaining prominence, rising from about 10% in 2010 to 46% in 2024'Q1

Both for the FGN and State Governments, but more for the former. For instance, the share of external

debts (FGN + States) which stood at about 10% in 2010 increased to 46%  in 2024'Q1

https://www.dmo.gov.ng/debt-profile/external-debts/external-debt-stock

Debt-GDP ratio was 61.51% in 1999, fell to 7.26% in 2006, around when the country got debt relief, but now back to the pre-debt relief years.

The country secured a debt relief with the Paris Club in June, 2005 to cancel 60% (i.e. $18bn out of

the $30.84bn) of its debt to the Club and repaid the balance. At 48.68% Debt-GDP ratio in 2024'Q1,

The country’s debt situation is looking more like the pre-debt relief years.

Thus, improved focus should be on the quantity and quality of assets created using these debts.

This is necessary for Nigeria’s fiscal and public debt sustainability

The above is further corroborated by information from the DMO which said as of March 31, 2024, the country's domestic and external debts stood at ₦121.67 trillion ($91.46 billion). Nigeria's debt rose by ₦24.33 trillion within three months – from ₦97.34 trillion ($108.23 billion) in December 2023 to ₦121.67 trillion ($91.46 billion)

Nigeria’s debt rose by ₦24.33 trillion within three months – from ₦97.34 trillion ($108.23 billion) in December 2023 to ₦121.67 trillion ($91.46 billion).

The debt represents external and domestic borrowings by the Federal Government and the 36 state governments and the Federal Capital Territory (FCT).

While total domestic debt was put at ₦65.65trn ($46.29bn), total external debt was ₦56.02trn ($42.12bn).

The DMO stated that total public debt grew from ₦59.12trn last December to ₦65.65trn as of March 2024.

The total debt was reduced in dollar terms by $16.77bn or 18.34 per cent, as the increase was driven majorly by naira depreciation.  The office used an official exchange rate of ₦1,330/$ to convert external debts to naira from ₦899.39 used to convert the debt in December 2023.

It added that excluding the impact of the naira exchange rate movement in the first quarter of 2024, the domestic debt saw a marked increase to ₦65.65tn on March 31, 2024, from ₦59.12tn on December 31, 2023.

According to the DMO also, the rise was also attributed to a new borrowing undertaken to partly finance the 2024 budget deficit, and the securitisation of a portion of the ₦7.3tn Ways and Means advances at the Central Bank of Nigeria.

It noted that “the increase was from new borrowing to part-finance the 2024 Budget deficit and securitization of a portion of the ₦7.3 trillion Ways and Means Advances at the Central Bank of Nigeria”.

“Whilst borrowing, as provided in the 2024 Appropriation Act, will continue, we expect improvements in the Government’s Revenue to enhance debt sustainability.”

President Tinubu recently said the country could not continue to service its debt with 90 per cent of its revenue, noting that the country was heading for destruction if that continued.

The above represents the financial situation of the country. It is under these circumstances that the Nigerian government under Bola Tinubu still continues indulging in profligate extravagancies.

While the Federal government continues wasting away borrowed funds, state Governors’ spending spree amid economic downturn and huge borrowing by state governments have triggered public criticisms

As Nigeria languishes in debt laced with unending economic crisis, it would have been given that governments in Nigeria would cut their coat according to the cloth but the reverse has been the case as governments and governmental Ministries, Departments and Agencies have continued their profligate lifestyle. The removal of fuel subsidy, increase in taxes, and others policies are enough for the governments to wake up to the existing realities of proffering timely solutions to these economic maladies that plunged the nation and citizens into difficulties.

The situation wouldn’t have been this helpless if the government had shown some understanding of the reality of the Nigerian situation and/or empathy towards the plight of the Nigerians’ situation.

President Bola Tinubu, for the umpteenth time on Thursday, urged Nigerians to persevere with his administration some more, saying he understands the pains they must be experiencing since subsidy on petrol was removed on May 29, 2023.

President Bola Tinubu however recently said that Nigerians are not the only ones facing poverty in the world while admitting that there are poverty and suffering in the land.

Rather than addressing the issue of wasteful spending in government the President felt the way to tackle the problem is to eliminate banditry and terrorism so that farmers cab return to the farm.