Macroeconomic Report & Economic Updates

Nigeria Economic Update (Issue 12)

As of the end of December 2022, Nigeria’s total debt stock stood at N46.25 trillion, comprising 40.4 percent (N18.7 trillion) in external debt and 59.56 percent (N27.55 trillion) in domestic debt, according to data from the Debt Management Office (DMO)1 . This represents a N6.69 trillion (16.9 percent) increase over the N39.56 trillion recorded for December 2021 and a 4.96 percent (N2.18 trillion) rise in the fourth quarter of 2022. The increase in debt stock is a result of new borrowings to fund budget deficits, and the issuance of promissory notes to settle government liabilities, which consequently increases the country’s debt obligations and servicing costs. For instance, the debt to GDP ratio has now increased to 23.20 percent, and the debt per capita stands at N213,430 (using a population of 216 million2 people). The steady and significant increase in Nigeria’s total debt stock, despite remaining below the limits of 55 percent suggested by the World Bank and IMF, 70 percent suggested by ECOWAS, and 40 percent self-imposed, raises serious concerns about the sustainability of the country’s debt and its fiscal vulnerability due to low revenue generation, ineffective diversification of sources of income, and constant exposure to shocks in the global oil market. Therefore, the government should seriously consider slowing down debt purchases, particularly for non-investment expenditures. Additionally, measures that would lead to an oil output increment should be taken, such as reviving the incapacitated refineries’ infrastructure and reducing revenue leakages. Hence, economic diversification should be a top priority for the government to increase revenue generation and lessen reliance on debt to pay government expenditures

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