Nigeria's Foreign Liabilities Hit $187.36 billion

Nigeria's foreign liabilities have jumped 42.41 percent from $131.56 billion in 2016 to $187.36 billion as of December 2020, according to the International Monetary Fund (IMF).

The IMF also stated that Nigeria's foreign assets rose by 13.67 percent from $89.87bn to $102.15 billion in the same period. Consequently, the country's Net International Investment Position (NIIP) stood negative at -$85.21bn as of December 2020.

Foreign assets are the investment securities owned by the Nigerian government, companies, or Nigerians in foreign countries while foreign liabilities are assets owned by foreign governments, corporations and individuals in Nigeria.

According to Corporate Finance Institute, a positive NIIP makes a country a net creditor while a negative NIIP implies that the country is a net debtor. The NIIP is a measure of a country’s financial condition and its sustainability to take on more financial credit.

Nigeria's negative NIIP implies that foreigners own more assets in Nigeria than the value of foreign assets owned by FG, the state governments, Nigerian-owned companies and Nigerian individuals.

To understand Nigeria’s creditworthiness, the IMF measures the NIIP as a percentage of a country’s GDP. With a GDP of $432.30bn according to the World Bank, Nigeria’s NIIP stood at -19.71 per cent as of December 2020.

At -19.71 per cent, Nigeria’s current account deficits due to lower earnings from oil revenues in 2020 places the country below the -17% benchmark which was set by Alessandro Turrini and Stefan Zeug of the European Commission’s Directorate-General for Economic and Financial Affairs in a 2016 paper titled ‘Benchmarks for Net International Positions’.