Nigeria’s new debt figure suggests how much each citizen owes

Nigeria’s total debt rose to N46.3 trillion or $103.11 billion at the end of December 2022, a 14.5% rise over the tally for the previous year, the Debt Management Office said Thursday.

The portfolio consists of domestic and external debts owed by the federal government and state governments. While domestic debt was N27.6 trillion ($61.4 billion) external stock was N18.7 trillion ($41.7 billion).

If the entire debt stock were shared per capita, each citizen would be owing N231,000. (Using population of 200 million)

– Ballooning debt

Nigeria’s debt has grown significantly since 2015 under the Buhari administration with the government repeatedly borrowing to fund budget deficits and overdrafts from the central bank. The total domestic debt when Mr Buhari came into office was N8.8 trillion while foreign debt was $7.3 billion.

“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,” DMO said.

The issuance of promissory notes “to settle some liabilities” helped raise the level, it said.

The government argues that despite the huge rise in national debt, Nigeria’s total stock remained within recommended safe limits with debt-to-gross domestic product by Dec. 31, 2022 at 23.2%, a little above 22.5% a year earlier.

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

Debt-to-Revenue

Critics have dismissed the debt-to-GDP evaluation, pointing to the impact of debt on government revenue. High debt means the government will channel scarce revenue from critical development to debt servicing.

Last year, Nigeria spent more than 80% of its revenue on debt repayment, according to government figures.

The debt office said the government is pushing to increase its revenue.

“Ongoing efforts by the government to increase revenues from oil and non-oil sources through initiatives such as the Finance Acts and the Strategic Revenue Mobilization initiative are expected to support debt sustainability,” it said.