Nigeria’s Debt Management Office released the country’s latest public debt statistics last week, showing the country’s debt-to-GDP ratio has exceeded 50% for the first time.
According to the DMO, Nigeria’s public debt portfolio is currently: 121 trillion nairadomestic debt is 65.6 trillion naira And the external debt portfolio is $42.1 billion ( 56 trillion naira This is converted to Naira (1000 US Dollars).
As of December 2023, Nigeria’s gross domestic product (GDP) is 229.9 trillion naira In nominal terms, it grew by just 2.74%, but in real terms, it grew by just 2.74%. This is because the country’s debt-to-GDP ratio is now 50% for the first time.
Nigeria’s latest debt-to-GDP ratio
Nigeria recorded a nominal GDP of 58.5 trillion naira in the first quarter of 2024, up from 51.2 trillion naira in the same period in 2023.
- However, nominal GDP for the second and third quarters of 2023 was 52.1 trillion naira and 60.6 trillion naira respectively.
- Fourth quarter GDP rose to 65.9 trillion naira, bringing total GDP for the past four quarters to 237.5 trillion naira.
- Based on 2023 GDP figures 229.9 trillion nairaNigeria’s debt-to-GDP ratio stands at 52.9 percent, marking the first time the country has reached such a high debt-to-GDP ratio.
- Using GDP data from the past four quarters 237.5 trillion nairaThe country’s debt-to-GDP ratio is also 51.2%
Why this is important: Nigeria often sees a “low” debt-to-GDP ratio as a sign of the country’s economic resilience, suggesting it has room to expand its borrowing capacity.
- For example, Ghana’s debt-to-GDP ratio was about 84.9% and South Africa’s was 72.2% as of 2023. Kenya and Egypt were 70.1% and 95.8%, respectively.
- These countries have significantly higher debt-to-GDP ratios than Nigeria, but Nigeria’s higher debt-to-revenue ratios mean that meeting its debt service obligations remains a constant challenge.
- Currently, Nigeria’s debt-to-GDP ratio exceeds 50 percent and continues to rise, limiting the country’s room to further expand its borrowing capacity while addressing current economic challenges.
Nigeria’s debt rises
Nigeria’s debt load has risen over the past eight years as the country faced a series of fiscal challenges due to sluggish oil revenues amid rising budget spending.
- For instance, under the Buhari administration, public debt increased from N12.6 trillion in 2015 to N97.3 trillion in 2023. Between December 2023 and March 2024, public debt in naira terms increased by N24.3 trillion.
- but Debt Management Office (DMO) Explained the increase The N24.33 trillion increase in total debt is the result of a combination of fresh borrowings and the devaluation of the Naira.
- The DMO further revealed that Nigeria’s new borrowing for the first quarter of 2024 was N7.71 trillion.
- of The new borrowings include: 2.81 trillion naira As part of yeahWow dMestic bBorrowing of 6.6 trillion naira provided for in the 2024 Budget Act and 4.90 trillion naira As part of the securitization of the N7.3 trillion revenue advance approved by the National Assembly..
Global ratings agency Moody’s also said Nigeria’s debt interest expenditure could consume up to 36% of federal government revenue in 2024.
According to the firm, the CBN’s hawkish monetary policy stance has led to an increase in federal local borrowing rates from an average of 12.8% in 2023 to about 19% in the first five months of 2024.