Macroeconomic Report & Economic Updates

Nigeria Economic Update (Issue 13)

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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