DMO Concerned About Nigeria's Rising Debt as Low Revenue Persists

The increase in the debt-to-GDP ratio from 23.4% in September 2022 to 37.1% in 2023 is attributed to several factors outlined in the report. These include the inclusion of an estimated N8.8tn debt for 2023, the government's Ways and Means debt amounting to over N23tn, and an estimated issuance of Promissory Notes worth N2.87tn, all contributing to the overall debt stock.

As of December 2022, Nigeria's total public debt stood at N46.25tn, indicating a potential increase of 76.52% in the current year.

The DMO report highlights concerns over the Federal Government's projected revenue of N10tn for 2023, emphasizing that it cannot support additional borrowing. The projected debt service-to-revenue ratio of 73.5% for 2023 is deemed high and poses a threat to debt sustainability. The DMO further emphasizes that the current revenue profile of the government is insufficient to support higher levels of borrowing.

These findings serve as a warning and call for urgent measures to address the rising public debt and ensure sustainable debt management in Nigeria. It is crucial for the government to explore alternative sources of revenue generation and prioritize strategies to reduce the debt-to-GDP ratio while ensuring fiscal discipline for long-term economic stability.

In a report titled, ‘Report of the Annual National Market Access Country (MAC) Debt Sustainability Analysis (DSA),’ the debt office said, “The projected FGN Debt Service-to-Revenue ratio at 73.5 per cent for 2023 is high and a threat to debt sustainability.

“It means that the revenue profile cannot support higher levels of borrowing. Attaining a sustainable FGN Debt Service-to-Revenue ratio would require an increase of FGN Revenue from N10.49tn projected in the 2023 Budget to about N15.5tn.”

DMO stated that the government must pay attention to revenue generation by implementing far-reaching revenue mobilisation initiatives and reforms including the Strategic Revenue Growth Initiatives and all its pillars with a view to raising the country’s tax revenue to GDP ratio from about 7 percent to that of its peer.

The Federal Government will be unable to borrow a lot as it nears its self-imposed debt limit of 40 per cent, the Debt Management Office has said.