Nigeria now faces the risk of being unable to sustain its rising national public debts unless urgent actions are taken to curtail expenditure and increase the country’s revenues
The Debt Management Office (DMO), which oversees the government’s debt issuance and management, raised the alarm at the weekend.
DMO warned that while Nigeria’s loans may still be within acceptable range of the country’s economic size, the country’s ability to sustainably meet the obligations on such loans is now under threat.
According to the DMO, with total public debt stock of N42.8 billion by the first half of this year, some 23.06 per cent of the country’s Gross Domestic Products (GDP), Nigeria is still within its benchmark limit of 40 per cent debt-to-GDP ratio.
World Bank-International Monetary Fund (IMF)’s limit is 55 per cent for Nigeria’s peer group and 70 per cent for Economic Community of West African States (ECOWAS).
Director General, Debt Management Office, Ms Patience Oniha, said beyond keeping within debt-to-GDP ratio, it is important that the public debt is sustainable and government is able to service its debt without the risk of distress.
Reviewing revenue budgets and actuals against actual debt service over the past eight years, Ms Oniha said the debt service-to-revenue ratio is “high”.
“Dependence on borrowing and low revenue base are now threatening debt sustainability,” DMO chief said.
The country’s chief debt management officer spoke at the annual conference of the Capital Market Correspondents Association of Nigeria (CAMCAN) at the weekend in Lagos. She spoke on the theme: “Nigeria’s Public Debt and the Capital Market”.
Data provided by the Budget Office of the Federation showed that Nigeria has consistently over the past eight years significantly underperformed its revenue target. For instance, while the country had budgeted a revenue target of N7.2 trillion in 2018, it generated only N3.9 trillion, about 54 per cent of revenue target. In 2019, it achieved about 59 per cent with revenue budget of N7 trillion and actual of N4.12 trillion.