By-Blessing Emmanuel
An audit from the Debt Management Office (DMO) of Nigeria, reports that the country’s public debt is totaling N87.38 trillion as at June, 2023 that ended the first quarter. This is a 75.29% increase, compared to N49.85tn recorded at the end of March 2023. That is to say the increase is within 3 months.
This public debt includes the N22.71tn Ways and Means Advances of the Central Bank of Nigeria to the Federal Government.
NB: ‘The Ways and Means Advances is a loan facility through which the CBN finances the shortfalls in the government’s budget.’
“Nigeria’s total public debt stock as at June 30, 2023, was N87.38tn ($113.42bn). It comprises the total domestic and external debts of the Federal Government of Nigeria, the thirty-six states, and the Federal Capital Territory.
“The major addition to the Public Debt Stock was the inclusion of the N22.712tn securitized FGN’s Ways and Means Advances,” the report reads.
In reaction to the 70% increase, DMO said fresh borrowings by the Federal Government and the sub-nationals from local and external sources also played a vital role.
During Buhari’s led government, DMO projected that Nigeria’s public debt burden may hit N77tn following the National Assembly’s approval of former President Muhammadu Buhari’s request to restructure the CBN’s Ways and Means Advances, but now, it all lies on the new government.
“The reforms already introduced by the present administration and those that may emerge from the recommendations of the Fiscal Reform and Tax Policies Committee, are expected to impact debt strategy and improve debt sustainability,” DMO added as FG’s current revenue profile can not support further borrowings.
“The revenue profile cannot support higher levels of borrowing. Attaining a sustainable FGN Debt Service-to-Revenue ratio would require an increase of FGN Revenue from N10.49tn projected in the 2023 Budget to about N15.5tn.”
DMO further advised the government to pay more attention to revenue generation by implementing far-reaching revenue mobilisation initiatives and reforms including the Strategic Revenue Growth Initiatives and all its pillars with a view to raising the country’s tax revenue to GDP ratio from about 7 per cent to that of its peer.
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To reduce borrowing and budget deficit, DMO stated that the government should also encourage the private sector to fund some of the capital projects that were being financed from borrowing through the public-private partnership schemes. Adding that the Federal Government can reduce borrowing through the privatisation and/or sale of Government assets.
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