A quarterly debt report released by the Debt Management Office (DMO) declared that by March 2022, Nigeria’s debt profile had risen to N41.6 trillion or $100.1 billion. This is a N2.05 trillion increase from N39.56 trillion recorded in December 2022. 

Driving the news 
The rise in Nigeria’s debt profile is as a result of the federal government’s new borrowing to fund the 2022 budget deficit and the $1.25 billion Eurobond issued in March of this year. Also, the increases in the debts of the state government and the federal capital partly contributed to the N41.6 trillion. 

What DMO report is saying 
The report partly reads “Whilst the total public debt to GDP at 23.27% was below Nigeria’s self-imposed limit of 40%, the momentum by the government to grow and diversify revenues remains a priority to ensure the public debt is sustainable.”

“Initiatives in this regard are yielding results as Actual revenues for January to November 2021 at N5.51 trillion was 39.21% more than the N3.96 trillion recorded in 2020. Similarly, the share of non-oil revenue grew by 80% compared to 61% in 2020.”

What this means 
For a country like Nigeria, if no drastic change occurs in the economy, it could slide into a debt servicing crisis in which all the revenue generated would be used for servicing debt. 

What you should know 

  • Nigeria in the first quarter of this year spent N896.7 billion on servicing both domestic and foreign debt in the first quarter of 2022. This represents a 12% year-on-year (YoY) decline from N1.02 trillion in 2021.
  • Nigeria’s N41.6 trillion debt is made up of N36.8 trillion external debt and N4.8 trillion domestic debt.
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