•Analysts advocate N2trn cut in expenditure
By Babajide Komolafe
Nigeria’s public debt is set to exceed N50 trillion this year, representing a 29.8 per cent increase above the N39.56 trillion at the end of 2021.
According to the Debt Management Office, DMO, latest data, the national public debt rose by 20 per cent, year-on-year, YoY, to N39.56 trillion in 2021 from N32.92 trillion in 2020.
The 20 per cent rise in the total public debt was driven by a 25 per cent increase in external debt and 17.3 per cent increase in domestic debt.
While total external debt rose to N15.86 trillion in 2021 from 12.71 trillion in 2020, domestic debt rose to N23.7 trillion in 2021 from N20.21 trillion in 2020.
Further analysis showed that most of the increase in the public debt in 2021 was occasioned by the federal government’s borrowing activities. Consequently, FG’s total debt rose by 22.8 per cent or N6.51 trillion to N33.12 trillion in 2021 from N26.97 trillion in 2020.
On the other hand, the debt profile of states and the Federal Capital Territory, FCT, rose by 8.0 per cent to N6.43 trillion in 2021 from N5.95 trillion in 2021.
Information available on the fiscal activities of the FG in 2022 shows that the nation’s public debt might increase by N11.8 trillion to bring the year end figure to a little above N51 trillion.
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The FG traditionally exceeds the annual budget deficit. In 2021, the FG exceeded the budget deficit by about 48 per cent to about N7.69 trillion from N5.2 trillion in the approved budget for the year.
Should this trend persist in 2022, the FG may end up with a deficit of N9.24 trillion as against the N6.25 trillion budgeted deficit for the year.
Furthermore, the decision of the President to extend fuel subsidy till June 2023, resulted in a supplementary budget request of N2.56 trillion to fund fuel subsidy from July to December 2022.
With further rises in crude oil prices, subsidy obligation is projected to rise beyond the supplementary budget provisions, a development analysts at Afrinvest Securities Limited, a Lagos-based investment house, said will push the public debt level to dangerous territories and further worsen the nation’s debt sustainability indices.
Consequently, they called for a N2 trillion cut in FG’s expenditure in 2022 to halt further deterioration in the nation’s debt sustainability indices, namely the Debt-to-Revenue Ratio, Debt-Service-to-Revenue ratio and the Debt-to-Gross Domestic Product ratio.