Report: Public Debt Could Reach N130tn By December

Report: Public Debt Could Reach N130tn By December

Nigeria’s public debt stock is projected to climb to N130tn by the end of 2024, raising concerns about the country’s debt-to-GDP ratio. This forecast is detailed in Afrinvest’s recent report, *Bank Recapitalisation: Catalyst for a $1tn Economy*, presented in Abuja……. CONTINUE READING 

As of the first quarter of 2024, Nigeria’s total public debt, encompassing both external and domestic liabilities, stood at N121.67tn. This represents a significant increase from N97.34tn in Q4 2023, reflecting a 24.99% growth quarter-on-quarter, according to the National Bureau of Statistics.

Afrinvest’s analysis projects that by year-end, Nigeria’s fiscal deficit, total public debt stock, debt-to-GDP ratio, and debt-servicing-to-revenue ratio will surpass N13tn, N130tn, 55%, and 60%, respectively.

The Q1 2024 debt composition includes N77.5tn in domestic debt (63.6%) and N44.2tn in external debt (36.4%). Domestic debt comprises N44.8tn in Federal Government bonds, N20.3tn in Treasury bills, and N12.4tn in other forms of domestic debt. External debt includes N14.3tn from multilateral creditors, N10.9tn from bilateral creditors, and N19.0tn from commercial lenders.

The report criticizes the 2024 budget’s revenue assumptions as overly optimistic, particularly the projected 43.9% revenue share from oil and minerals, which it deems unrealistic. The 2023 budget also showed a shortfall, with actual revenue falling short of the budgeted amount by 7.6%, totaling N11.9tn.

Expenditure surged by 31.8% to N18.8tn, resulting in a heightened deficit of N46.9tn. The report notes that the Federal Government’s debt share rose to 44.6% year-on-year, accounting for 89.7% of total public debt by year-end.

Afrinvest warns that the Federal Government’s extensive borrowing could negatively impact bank deposits due to attractive yields on risk-free assets compared to bank interest rates. The report also highlights concerns about potential asset deterioration in banks due to increased borrowing.

Despite these challenges, Afrinvest lauds the Central Bank of Nigeria for its efforts to streamline Bureau De Change operations and consolidate forex segments. However, the report criticizes the inadequate forex reserves, which exacerbate market demand issues.

To address the forex crisis sustainably, Afrinvest recommends exploring alternative forex sources, such as bilateral loans, natural resource-linked loans, debt-for-nature swaps, and asset concessions. The report emphasizes that revitalizing traditional forex inflow sources, including oil production, remittances, and foreign investments, requires supportive fiscal policies to achieve long-term stability.

For the latest updates and juicy gossip, dive into the Bushradiogist platform by clicking this link: Bushradio. For advert placement only, shoot a WhatsApp message to 0807 580 6790.