Nigeria's Debt Problem Worsens As FG Borrows N2.3trn In Four Months

The Debt Management Office (DMO) disclosed that Nigeria's debt skyrocketed by NGN2.381 trillion between March 31 and June 20, 2020, compounding the debt problem of Nigeria - this reflects the Federal Government's cravings for a loan.

As at March this year, Nigeria's total debt stood at NGN28.628 trillion but grew by N2.381 trillion to reach N31.009 trillion at the end of June 2020. According to DMO, the increase was due to the International Monetary Fund's (IMF) support loan.

The IMF offered Nigeria a USD3.6 billion support loan. Also, to finance the revised 2020 appropriation act, Nigeria increased its domestic borrowing. DMO also cited the issuance of the NGN162.557 billion Sukuk, and promissory notes issued to settle claims of exporters.

Note that the total debt stock of Nigeria includes the three tiers of government - Federal, State, and Local government. Due to the COVID-19 pandemic, the Nigerian government has increased its debt, with the Minister of Finance, Zainab Ahmed, stating that to fund the revised budget, FG will depend on domestic and international creditors.

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Since the COVID-19 outbreak, Nigeria has approached the World Bank, International Monetary Fund, and African Development Bank (AfDB) for a loan of about $6.9 billion. DMO said the total debt will further increase upon new borrowings from the state.

The debt office said, “The DMO expects the public debt stock to grow as the balance of the new domestic borrowing is raised and expected disbursements are made by the World Bank, African Development Bank, and the Islamic Development Bank which were arranged to finance the 2020 budget.

“It will be recalled that the 2020 appropriation act had to be revised in the face of the adverse and severe impact of COVID-19 on government’s revenues and increased expenditure needs on health and economic stimulus amongst others.

“Additional promissory notes are expected to be issued in the course of the year, this, and new borrowings by state governments are also expected to increase the public debt stock.”