The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) among other experts have drawn attention to the risk this national debt poses for Nigeria's economy.

But debt service spending decreased in 2022 to N3.87 trillion, down 8.3 per cent from the previous year's total of N4.22 billion spent on debt service by the government.

Yesterday, the DMO reported that Nigeria's public debt accounts for the total amount owed by federal and local governments as well as Federal Capital Territory.

The DMO stated that the level of debt under review was 23.20% of GDP, which is within established limits set by both the Federal Government and international organizations.

It said: “The ratio of 23.20% is within the 40% limit self-imposed by Nigeria, the 55% limit recommended by the World Bank/International Monetary Fund, and, the 70% limit recommended by the Economic Community of West African States.”

Details of the data showed that the total Domestic Debt Stock was N27.55 trillion ($ 61.42 billion) while Total External Debt Stock was N18.70 trillion ($ 41.69 billion).

The DMO explained that the increase in government debt was due to new borrowings by federal and state governments. They were also using promissory notes to settle some of their liabilities.

It said: “Amongst the reasons for the increase in the Total Public Debt Stock were New Borrowings by the FGN and sub-national governments, primarily to fund budget deficits and execute projects. The issuance of Promissory Notes by the FGN to settle some liabilities also contributed to the growth in the Debt Stock.”

The DMO expressed optimism that the government's efforts to increase revenues from oil and non-oil sources by passing legislation such as Finance Acts would yield expected results. These higher revenues will enable debt sustainability for both current and future generations in Nigeria.

As of December 31, 2022, the Federal Government’s domestic debt totaled N 22.210 trillion and was held in various instruments.

Detailed analysis showed that N16.421 trillion (73.97 per cent) was held in Federal Government of Nigeria (FGN) Bonds; Nigerian Treasury Bills, N4.422 trillion (19.91 per cent); FGN Sukuk N742.557 billion (3.34 per cent); Promissory Notes, N530.033 billion (2.39 per cent); Nigerian Treasury Bonds, N50.988 billion (0.23 per cent); FGN Savings Bond, N27.505 billion   (0.12 per cent); and Green Bond, N15 billion, (0.07 per cent).

Reacting, the Director General, of the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), Mr Sola Obadimu, stated: “A rising public debt profile is not too good for a developing economy by any means, particularly if one cannot easily point to any developmental effects arising from the growing debt profile.

Some of the possible indirect effects include rising inflation rates and a lower quality of life for most citizens. If we fail to check these trends, they could eventually lead us into a debt crisis.

This is a situation where creditors are not willing to lend us more money and/or we are unable to meet our current debt payments.

”In summary, we need to exercise more fiscal discipline and be more accountable by getting good value for money spent for a start. Accountability is key.”