Worried Experts Say Nigeria’s Debt May Hit N34trn by Year-end

Economic experts in Nigeria are worried that the country’s rising debt portfolio is becoming unsustainable as it may hit N34 trillion by the end of 2020.

According to an earlier report by the country’s Debt Management Office, the public debt stock grew by eight percent to N31 trillion at the end of the second quarter, which translates to 21 percent of the Gross Domestic Product.

While expressing concerns over the debt issues, the President of the Lagos Chamber of Commerce and Industry (LCCI), Toki Mabogunje, said the rising debt was fueled by the upward trend in debt-service to revenue ratio from 60 percent by year-end 2019 to 72 percent as of May 2020.

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Speaking at the Chamber’s Annual General Meeting on Tuesday, Oct. 6, Mabogunje said, “At the peak of the pandemic in the second quarter, the Federal Government received financial support worth $3.4bn and $288.5m from the International Monetary Fund and the African Development Bank respectively, while negotiations are also on-going for a cumulative $1.8bn credit support from the World Bank, AfDB and Islamic Development Bank.

“The high level of debt servicing continues to hinder robust investments in hard and soft infrastructures which are key to stimulating productivity and improving living standards”.

She added that the poor economic performance is glaringly reflected in how badly the key sectors of the economy are doing, with numbers showing that 19 sectors contracted, 14 in recession, 11 expanded, and two sectors had moderation in growth.

She said, “While we commend policymakers for their interventions in reflating the economy and supporting businesses, we urge that special attention be given to sectors severely impacted by the pandemic.

“The federal and state governments need to expeditiously redirect attention to these sectors including aviation, hospitality, entertainment, and manufacturing.

“This has become necessary to protect jobs, preserve investments and provide the much-needed liquidity required to revive these sectors.”

The LCCI, however, believe that with the decline being recorded in the rate of COVID-19 confirmed cases and more lifting of ban on businesses, there may be upward performance in the GDP by the third quarter.