In a recent report, the Debt Management Office (DMO) has sounded a warning to the Federal Government as Nigeria’s total public debt skyrockets to N87.38tn, marking a staggering 75.29% increase from the N49.85tn recorded just three months earlier.
This alarming surge includes the incorporation of the N22.71tn Ways and Means Advances, a loan facility from the Central Bank of Nigeria to the Federal Government.
DMO’s statement emphasizes that the debt encompasses both domestic and external debts, spanning the Federal Government, the thirty-six states, and the Federal Capital Territory.
Notably, this debt surge exceeds the DMO’s prior projection by a considerable N10.38tn.
Further breakdown reveals that Nigeria’s domestic debt accounts for 61.95% of the total debt, with external debt comprising the remaining 38.05%.
While the domestic debt surges by 79.18% from N30.21tn, the external debt rises by 69.28% from N19.64tn in Q1 2023.
DMO’s 2022 Debt Sustainability Analysis Report raises alarm bells, warning that the projected government revenue of N10tn for 2023 may not be sufficient to support additional borrowings.
With a forecasted government debt service-to-revenue ratio of 73.5% for 2023, the DMO expresses concerns about sustainability.
In a report titled ‘Report of the Annual National Market Access Country Debt Sustainability Analysis (DSA),’ the DMO highlights the urgency of increasing government revenue to alleviate the high debt service-to-revenue ratio.
It suggests initiatives such as the Strategic Revenue Growth Initiatives to raise the country’s tax revenue to GDP ratio.
As Nigeria nears its self-imposed debt limit of 40%, the DMO advises the government to seek private sector investment for capital projects and explore avenues for asset privatization or sales to reduce reliance on borrowing.
President Bola Tinubu’s administration expresses a commitment to break the cycle of overreliance on borrowing, recently inaugurating the Presidential Committee on Fiscal Policy and Tax Reforms to enhance the country’s revenue profile and business environment.
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