World Economy

Nigeria’s Debt to Top 24% of GDP by 2018

Nigeria’s Debt to Top 24% of GDP by 2018Nigeria’s Debt to Top 24% of GDP by 2018

The International Monetary Fund on Wednesday said Nigeria’s indebtedness would climb to 24.1% of its gross domestic product by 2018.

Nigeria ended 2016 with a debt to GDP ratio of 18.6% while at the end of 2015, this ratio stood at 12.1%, the IMF said. The fund made this declaration in its World Economic and Financial Surveys, presented Wednesday, AllAfrica reported.

By the end of 2017, Nigeria’s current indebtedness may reach 23.3% of the GDP, the IMF said.

Earlier, the National Bureau of Statistics had said that Nigeria ’s GDP for the year ended December 31, 2016 stood at N67.98 trillion ($22 billion). By IMF’s projection, Nigeria’s debt to GDP ratio would surge by 100%, from 12.1% in 2015 to 24.1% in 2018.

There have been growing concerns over Nigeria’s rising debt profile, with analysts raising alarm over the government’s decision to incur more debts.

Earlier, the World Bank had expressed concern over the debt payment to revenue ratio, saying that reduced revenue earnings might render the country’s debt unsustainable.

Yue Man Lee, senior economist at the World Bank office in Nigeria, said Nigeria has to increase its revenue base or work towards balancing the debt profile, hence the debt would be unsustainable.

The slump in the price of oil, Nigeria’s main revenue source, has heightened the government’s borrowing plans. According to records of the 2017 fiscal year, the sum of N2.35 trillion is expected to be borrowed in the year.

Nigeria’s debt profile is dominated by local debts, which are characterized by high interest rates.

Earlier in February, the director general of the Debt Management Office, Abraham Nwankwo, had said that the nation’s total debt profile as at December 31, 2016 was $57.39 billion.

Nwankwo, who said the amount included domestic and foreign debts owed by the country as at the end of 2016, noted that the external debt profile stood at $11.41 billion, while the domestic debt stock stood at $45.98 billion.

He pointed out that the domestic debt stock of the federal government of Nigeria, the 36 states and the FCT accounted for about 80% of the total debt, while the external debt stock accounted for about 20%.

He, however, assured that though Nigeria’s debt profile was on the increase, it was not in a precarious economic situation that would warrant seeking debt relief.

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