Nigeria’s Debt in Critical Levels—NEITI Warns

By Modupe Gbadeyanka

The Nigerian Extractive Industries Transparency Initiative (NEITI) has raised an alarm over Nigeria’s rising debt.

NEITI, in a recent report, warned that the nation’s debt in relation to revenues appears to have reached critical levels.

According to NEITI, domestic debt servicing constituted 90 percent of total debt servicing, stressing that “domestic debt servicing consistently outstrips external debt servicing.”

“In the first quarter of 2015, domestic debt servicing made up over 93 percent of total debt servicing.

“This figure did not change much by the first quarter of 2017 as domestic debt servicing was over 92 percent of total debt servicing,” the report added.

The agency explained that in the first quarter of 2017, the three tiers of government in Nigeria spent N513 billion on debt servicing from N1.276 trillion they received in the period under review.

NEITI disclosed that this simply means that debt servicing took up 40.27 percent of FAAC disbursement for the first quarter of this year.

“The figure reveals that debt servicing as proportion of total FAAC allocations is generally higher in the first quarter of the year, after which it falls to lower levels.

“Based on this, the figure of 40.27 percent observed in the first quarter of 2017 might be an upper threshold and it would thus be expected that this figure will be lower for the remaining quarters of the year,” the report said.

However, the Debt Management Office (DMO) is yet to provide data on the figure for the second quarter of 2017.

At the moment, Nigeria’s debt to GDP ratio stands at 23.3 percent and will rise above 24 percent next year.