The World Bank in its latest report said that Nigeria’s public debt is concerning due to the rising debt service-to-revenue ratio.
The Washington-based organisation said that the debt service to revenue ratio could stand at 102.3 per cent by the end of 2022.
This will be a decline compared to debt-service to revenue of 119.02 per cent recorded in the first four months of this year.
From January through April, Nigeria’s total revenue stood at N1.63 trillion while debt servicing stood at N1.94 trillion, showing a variance of over N300 billion, according to the 2023-2025 Medium Term Expenditure Framework and Fiscal Strategic Paper (MTEF and FSP) released by the Budget Office.
Nigeria’s total public debt rose by 2.98 per cent in the second quarter of this year to N42.84 trillion ($103.31 billion), according to the Debt Management Office.
The projection by the World bank was contained in its latest Africa’s Pulse report, which is a biannual analysis of the near-term macroeconomic outlook for the region, published around the World Bank/IMF Spring and Annual meetings each April and October.
“Albeit at a low level (37.6 per cent), public debt in Nigeria is a concern as the country recorded a high debt service-to-revenue ratio (118.9 per cent) between January and April,” the report read in part.
“Debt pressures have increased as debt service to revenue is projected to increase to 102.3 percent by end 2022.
“This suggests that high oil prices do not translate into government receipts due to elevated subsidies for petroleum products. The combination of low production in the oil industry and unsustainable subsidies is one of the main obstacles to attaining debt sustainability.”
The bank further said that a number of countries were either in or at high risk of debt distress due to the removal of the Debt Service Suspension initiative, although oil-exporting countries were expected to reduce government debt significantly, except Nigeria.
Ifunanya Ikueze is an Engineer, Safety Professional, Writer, Investor, Entrepreneur and Educator.