BY CHARLES ABUEDE
Nigeria’s Central Bank disclosed in new data obtained from its site that the Nigerian government spent $101 million on debt service repayment between December 2021 and January 2022 after the figure jumped by $31.46 million in one month, representing a 45 percent increase on a month on month analysis.
According to the CBN data on debt service payment, Nigeria spent $69.83 million on debt service in December 2021 after the same gulped $148.57 million and $85.23 million in November and October last year in that order.
However, the Debt Management Office disclosed that Nigeria’s outstanding debt stood at $95.78 billion or N39.57 trillion as of the end of December 2021, adding that total external debt gulped 40.08 percent, totalling N15.86 trillion or $38.39 billion in the period under review while the total public debt rose to $86.4 billion or N32.92 trillion in 2021 from $80.05 billion or N27.4 trillion in the prior year of 2019.
Meanwhile, the DMO projects that Nigeria’s debt stock was likely to hit N45 trillion in 2022 as the government planned to borrow an additional N6.39 trillion to finance the 2022 budget deficit.
But Patience Oniha, director-general of the Debt Management Office, has said the borrowings by the Nigerian government to finance her deficits and fund critical infrastructure is not necessarily bad.
Some economic analysts have pointed out that Nigeria’s public debt will increase further in 2022. Even now, government debt has risen by more than three folds since 2015 or by almost five folds when CBN Ways and Means and AMCON liabilities are included in total debt.
As a share of GDP, public debt appears below the sustainability threshold of 40 percent. However, debt servicing cost as a share of revenue is high and stood at 76 percent as of November 2021.
This means that Nigeria could be trapped in a debt cycle, where it borrows to fund recurrent expenditure. For instance, from January to November 2021, aggregate capital expenditure was N3.4 trillion while total borrowing stood at N7 trillion, according to data from the Federal Ministry of Finance, Budget and National Planning. Rising debt costs, without a corresponding increase in revenue, could trigger macroeconomic instability if the trend continues.
In another development, the Centre for the Promotion of Private Enterprise (CPPE) at the unveiling of its economic review for 2022 had said Nigeria’s debt, including that of the Asset Management Corporation of Nigeria (AMCON) and borrowings from the Central Bank of Nigeria (W and M), could hit N50 trillion within the shortest possible time.