According to findings, Nigeria’s total public debt is projected to reach N81.64tn this year, based on the 2022 Debt Sustainability Analysis Report by the Debt Management Office. The increase in debt is attributed to factors such as new borrowings, government debt, and promissory notes. The Debt Management Office warns that the projected debt-to-revenue ratio of 73.5% for 2023 is high and poses a threat to debt sustainability, emphasizing the need for revenue generation and reforms to reduce borrowing.
The report highlights the government’s limited borrowing space as it approaches its self-imposed debt limit of 40%. The Debt Management Office recommends that the government explore alternative avenues for financing capital projects, such as public-private partnerships and the privatization or sale of government assets. Additionally, it is revealed that the Federal Government is considering issuing promissory notes to address its judgment debt and contractual arrears, which could contribute to a significant increase in promissory note debt.
MARKETNEWS THOUGHTS
The high level of public debt in Nigeria raises concerns about the country’s ability to manage its debt and maintain sustainability. The government needs to focus on generating more revenue and implementing reforms to reduce reliance on borrowing. Exploring alternative financing options and improving the efficiency of public spending can help alleviate the burden of debt and promote a more stable economic environment. It is crucial for Nigeria to strike a balance between meeting its financial obligations and ensuring long-term fiscal stability.
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