Nigeria’s public debt stock has risen to N44.06tn in Q3 2022, according to a report by Punch Newspaper. This represents an increase of N1.22tn over the past three months and comes as the country continues to struggle with repaying its existing debt. The new rise in debt is the result of the government borrowing funds to part-finance the deficit in the 2022 Appropriation Act, as well as new borrowings by sub-nationals.
The total public debt stock consists of N26.92tn in domestic debt and N17.15tn in external debt. In a statement, the government said that the increase in debt was largely due to new borrowings by the Federal Government to part-finance the deficit in the 2022 Appropriation Act, as well as new borrowings by sub-nationals.
A Washington-based bank has warned that the debt could become unsustainable if it is subjected to macro-fiscal shocks. The bank noted that while the current debt-to-GDP ratio of 27% is considered sustainable, any shocks could push the debt to unsustainable levels. The debt-to-GDP ratio in Nigeria is rising quickly, and the total stock of debt has almost doubled between 2016 and 2020. Without a change in policy, the debt is expected to reach 40% of GDP by 2025.
The Nigerian government has come under increasing pressure to address the rising debt levels and implement policies to reduce the country’s reliance on borrowing. Some experts have suggested reducing government spending and increasing revenue through measures such as tax reforms.
However, the government has faced challenges in implementing such measures, due to a variety of factors including a struggling economy and political instability. As a result, the country’s debt levels continue to rise, posing a significant risk to the country’s economic stability.
It is crucial for the Nigerian government to take steps to address the rising debt levels and implement policies that will reduce the country’s reliance on borrowing. This will require a combination of spending cuts and revenue-generating measures, as well as political will and commitment to enacting the necessary changes. Without such action, the country’s debt levels are likely to continue to rise, putting its economic stability at risk.