Nigeria faces severe economic crisis as debt stock reaches $86bn in 11 months
Nigeria’s total debt stock has risen to $86bn (N39.6tn) in November 2021 from $78bn (N32.9tn) in December 2020.
According to the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, the government borrowed an estimated $15bn (N6.7tn) between January and November 2021, PUNCH reported.
During the 2022 approved budget presentation, Mrs Ahmed noted that the new borrowing in the period under review consists of $12bn (N5.1tn) domestic debt and another $2.5bn (N1.6tn).
However, the minister justified government borrowing and the country’s rising debt level by explaining that Nigeria had a revenue challenge and not a debt problem. She added that the debt level was still within sustainable limits and assured the public that there was no cause for concern.
She said, “This is to restate that the debt level of the Federal Government is still within sustainable limits. Borrowings are essentially for capital expenditure and human development as specified in Section 41(1)a of the Fiscal Responsibility Act 2007.
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According to Investopedia, a budget deficit occurs when a government spends more in a given year than it collects in revenues, such as taxes. Under the Buhari-led administration, Nigeria’s public debt has risen the most compared to previous administrations since 1999. At the same time, foreign debt has tripled more than the combined figure of the past three administrations, according to PREMIUM TIMES analysis of the government’s domestic and foreign debts.
Economic analysts weighing in on the matter explained that although Nigeria’s debt remains within the IMF recommended range with respect to GDP, the country faces a challenge if “How the loans are going to be paid back” is not in question for the leaders.
One economist said the huge amount the present administration is borrowing is to cater to many failures, and they just borrow to keep some activities going. “The loan is unsustainable from the perspective of revenue, from the perspective of corruption and value for money and the perspective of project implementation.”
In March 2021, the Debt Management Office had disclosed that the country’s total public debt stock was $78bn (N32.9tn) as of December 2020.
An additional $15bn (N6.7tn) loan means the total public debt stock rose to $86bn (N39.6tn) as of November 2021.
