According to the Debt Management Office (DMO), Nigeria’s high debt profile is the result of decades of running budget deficits by successive administrations. Patience Oniha, the Director-General of the DMO, stated this on Sunday in Abuja.
According to Oniha, an analysis of Nigeria’s fiscal statistics reveals that the government has not only run expanding budget deficits, but that the majority of the deficits have been sustained by domestic and foreign borrowing.
“The records show that deficits in the annual budgets, including supplementary budgets rose to N10.78 trillion in 2023 from N1.62 trillion in 2015.
“Between 82 per cent and 99 per cent of these were funded by new borrowing which ranged from N1.46 trillion in 2015 to N8.80 trillion in 2023.
“These facts confirm that these budget deficits, funded by new borrowings, have been responsible for the rapid growth in the debt stock and the resultant increases in debt service,” she said. According to Oniha, this trend could have been avoided or at least moderated if revenues had been higher or expenditures lower.
She tasked the incoming government of Sen. Bola Tinubu to take cognisance of the situation and prioritise increased revenue generation.
“The budget deficits would have been much smaller, or Nigeria would have operated on a balanced budget. It is therefore imperative that the incoming government takes into account the perennial budget deficits in the preparation of the Medium-Term Expenditure Framework (2024 – 2026) and the 2024 budget.
“The government should also accelerate the growth in revenues to ensure debt sustainability,” she said.
Nigeria’s debt profile remained at N46.25 trillion in December 2022, an increase of around seven trillion Naira from the debt estimates for 2021. The total public debt stock, on the other hand, consists of the Federal Government’s domestic and foreign debt stocks, as well as the debt stocks of the 36 state governments and the Federal Capital Territory.
Total domestic debt stock is N27.55 trillion ($61.42 billion), whereas total external debt stock is N18.7 trillion ($41.6 billion). The public debt statistics, however, do not include the Federal Government’s N22.7 trillion debt to the Central Bank of Nigeria (CBN) through Ways and Means advances.
The Ways and Means advances, which has been securitised by the Senate, and presently awaiting concurrent securitisation by the House of Representatives before it is included in the country’s public debt stock.
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