The Debt Management Office, DMO, has announced an alarming rise in Nigeria’s debt and according to records, Nigeria’s indebtedness to creditors – local and foreign – rose from the N17.36 trillion recorded at the end of December 2016 to N19.16 trillion, representing an increase of about N1.8 trillion.
A report released by DMO shows that at the end of March 2015, the country’s total debt stood at N12.06 trillion, representing an increase of N7.1 trillion in two years. Data also showed the Nigerian government’s domestic debt stood at N11. 97 trillion, as against the N8.51 trillion recorded in 2015.
This is said to represent a domestic borrowing record of N3.46 trillion, representing 40.71 per cent. Meanwhile, the country’s external debt for the federal and state governments rose from $9.46 billion to $13.81 billion in two years, representing an increase of $4.35 billion, put at 45.98 per cent.
Furthermore, the DMO noted that the official exchange rate of N306.35 to $1 was deployed in calculating the country ’s external debt for March 31, 2017, while the official rate of N197 to $ 1 was used in determining the foreign debt for March 31 , 2015.
As of March 31, 2017, the domestic debt profile of the states stood at N 2 .96 trillion – rising from N1.69 trillion at the same time in 2015, representing an increase of N1.27 trillion.
Hit by dwindling oil revenues, the Nigerian government has had to resort to borrowing to finance its numerous projects and meet other developmental demands. Experts have raised concerns over the government’s borrowing plans, with many suggesting that it is dangerous for the nation’s finance.
The International Monetary Fund, IMF, had earlier projected that the nation’s indebtedness would hit 24.1 per cent of the Gross Domestic Product, GDP, by 2018, adding that by 2017, Nigeria’s debt profile would have reached 23 .3 per cent of the GDP.
Same with the World Bank which also expressed reservations over Nigeria’s debt servicing to revenue ratio, adding that declined earnings might render the country’s debts unsustainable. Other figures obtained from the statistics bureau pegs Nigeria’s GDP for the year 2016 at N67. 98 trillion.
A latest report on crude oil price drop is obviously linked to the increased rate of the nation’s debt. Nigeria’s excess crude oil revenue has dropped by five per cent as oil prices fell to $49.26 per barrel on Monday, posing a fresh threat to the implementation of the unsigned 2017 budget and the exchange rate of the naira.
The new low in oil price was triggered by agreement by Saudi Arabia and three other countries in the Middle East to cut ties with Qatar.
However, efforts are being made to secure more foreign debts and reduce the exposure of the Federal Government to the domestic debt market.