The Debt Management Office (DMO) has attributed Nigeria’s high debt profile to years of operating budget deficits by successive governments. In an interview with the News Agency of Nigeria (NAN), DMO Director-General Patience Oniha highlighted the country’s fiscal data, revealing that budget deficits have been on the rise and primarily funded through local and external borrowing.
Oniha emphasized that deficits in annual budgets, including supplementary budgets, escalated from N1.62 trillion in 2015 to N10.78 trillion in 2023. Astonishingly, between 82% and 99% of these deficits were financed by new borrowings, ranging from N1.46 trillion in 2015 to N8.80 trillion in 2023.
The director-general highlighted the direct correlation between these budget deficits, new borrowings, and the rapid growth in Nigeria’s debt stock. Additionally, the increased debt service payments have become a burden on the nation’s finances.
Oniha stressed that this trend could have been mitigated had revenues been higher or expenditures lower. She urged the incoming government, led by Sen. Bola Tinubu, to recognize the gravity of the situation and prioritize increased revenue generation.
She further asserted that the incoming government must consider the persistent budget deficits when formulating the Medium-Term Expenditure Framework (2024-2026) and the 2024 budget. Accelerating revenue growth is imperative to ensure debt sustainability, according to Oniha.
As of December 2022, Nigeria’s debt profile reached N46.25 trillion, marking a significant increase of approximately seven trillion Naira from the previous year. The total public debt stock comprises domestic and external debt of the Federal Government, the 36 state governments, and the Federal Capital Territory.
Of the total debt stock, N27.55 trillion ($61.42 billion) represents domestic debt, while N18.7 trillion ($41.6 billion) represents external debt.
It’s important to note that the public debt figures exclude the N22.7 trillion Federal Government’s indebtedness to the Central Bank of Nigeria (CBN) through Ways and Means advances. This amount, which has been securitized by the Senate and awaits concurrent securitization by the House of Representatives, will eventually be included in the country’s public debt stock.
With the recognition of the root causes of Nigeria’s high debt profile, it is hoped that prudent financial management and enhanced revenue generation will pave the way for a sustainable economic future.