Debt Crisis Looms as Nigeria’s Public Debt Reaches N134.3 Trillion

In a worrying trend, Nigeria’s public debt has surged to a staggering N134.3 trillion in the second quarter of 2024, according to the latest data released by the Debt Management Office (DMO). This represents a significant increase from the N128.4 trillion recorded in the first quarter of the year.

Key Highlights:

• Total public debt now stands at N134.3 trillion, up from N128.4 trillion in Q1 2024.
• The debt-to-GDP ratio has risen to 23.4%, exceeding the internationally recommended threshold.
• Domestic debt accounts for 67.6% of the total debt, while external debt makes up 32.4%.
• The Federal Government’s share of the debt is N104.3 trillion, while states and the Federal Capital Territory (FCT) account for N30 trillion.

Causes of the Increase:

1. Budget Deficits: Continuous budget deficits have led to increased borrowing to finance government expenditures.
2. Declining Revenue: Lower-than-expected revenue generation due to factors like oil price fluctuations and economic downturns.
3. Infrastructure Development: Investment in critical infrastructure projects, such as roads, bridges, and energy systems.

Implications:

1. Economic Burden: Rising debt levels can stifle economic growth, increase inflation, and reduce investor confidence.
2. Interest Payments: Higher debt servicing costs will divert resources from essential public services and infrastructure.
3. Risk of Debt Distress: Exceeding the debt-to-GDP ratio threshold increases the risk of debt distress and potential default.

Expert Insights:

“The increasing debt profile is alarming and requires urgent attention. We must prioritize fiscal discipline, enhance revenue generation, and optimize debt management strategies to avoid a debt crisis,” said Dr. Aminu Usman, a renowned economist.

Government’s Response:

The Federal Government has assured citizens that it is working to address the rising debt levels through:

1. Debt Restructuring: Renegotiating loan terms to reduce interest rates and extend repayment periods.
2. Revenue Enhancement: Implementing policies to boost revenue generation, such as tax reforms and investment incentives.
3. Fiscal Responsibility: Strengthening fiscal discipline and reducing unnecessary expenditures.

Nigeria’s escalating public debt poses significant economic risks. To mitigate these challenges, the government must adopt a multi-faceted approach, focusing on fiscal discipline, revenue enhancement, and debt optimization strategies. Citizens must also demand transparency and accountability in public finance management.

What are your thoughts on Nigeria’s rising public debt? Share your opinions in the comments section below.

About The Author

Fasholu Gabriel Oluwatobi

Gabriel O. Fasholu is the founder and editor of SPYCONNET. A brilliant Educationist, Social Media Enthusiast & Freelancer who is passionate about passing undefiled information to the entire public.

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