Nigeria’s debt-to-GDP ratio has crossed the 50% threshold for the first time, according to the latest public debt figures released by the Debt Management Office (DMO). As of December 2023, the country’s total public debt stood at N121 trillion, comprising domestic debt of N65.6 trillion and foreign debt of $42.1 billion (approximately N56 trillion).
With a nominal GDP of N229.9 trillion in 2023, Nigeria’s debt-to-GDP ratio now stands at 52.9%. Alternatively, using the trailing four-quarter GDP figure of N237.5 trillion, the debt-to-GDP ratio is 51.2%. This significant milestone raises concerns about the country’s ability to manage its debt burden and meet its debt service obligations.
Nigeria’s rising debt profile is attributed to a combination of factors, including low crude oil prices, rising budgetary expenditure, and a high debt service-to-revenue ratio. The country’s public debt has increased significantly over the past eight years, from N12.6 trillion in 2015 to N97.3 trillion in 2023. The recent increase of N24.3 trillion between December 2023 and March 2024 is largely due to fresh borrowing and naira devaluation.
The Debt Management Office (DMO) has explained that the fresh borrowing of N7.71 trillion in the first quarter of 2024 includes N2.81 trillion in domestic borrowing and N4.90 trillion in securitization of Ways and Means Advances. Global ratings agency Moody’s has warned that Nigeria’s interest spending on debt may consume up to 36% of the federal government’s revenue in 2024, due to the hawkish monetary policy stance of the Central Bank of Nigeria (CBN).
This development highlights the need for Nigeria to address its debt sustainability challenges and explore alternative funding options to support its economic development goals.
