PricewaterhouseCoopers International Limited (PWC) has reported that Nigeria’s public debt soared to N121.67 trillion in the first quarter of 2024.
The professional services firm emphasized that increasing debt without corresponding revenue-generating investments could harm private investors and further deteriorate the country’s long-term debt profile. PWC’s analysis, featured in its ‘Nigerian Economic Outlook, June 2024’ report, underscores the risk of crowding out private investment due to continuous debt issuance.
The report noted that Nigeria’s public debt increased by 144.1 percent from N49.85 trillion in Q1 2023 to N121.67 trillion in Q1 2024, driven by factors such as naira devaluation, additional borrowing, and the securitisation of ways and means.
PWC revealed that by May 2024, the Debt Management Office (DMO) had raised N4.9 trillion of the N7 trillion approved for securitisation and N4.5 trillion to cover the 2024 budget deficit.
Despite efforts to manage the fiscal deficit, which reached 6.1 percent of GDP in 2023, the debt servicing costs remain high, with 89 percent of the budgeted fiscal deficit expected to be financed through new borrowings.
Additionally, Nigeria’s debt-to-GDP ratio has crossed the 50 percent mark for the first time, as revealed by the DMO’s latest figures. With a public debt portfolio of N121 trillion, including domestic and foreign debt, Nigeria’s debt-to-GDP ratio stands at 52.9 percent based on the 2023 GDP figure of N229.9 trillion.
Economist Paul Alaje suggested that the government should explore innovative revenue-raising methods without overly burdening the populace, to address the fiscal challenges inherited by the current administration.
Source: Daily Trust