The International Monetary Fund, IMF, on Wednesday said Nigeria’s indebtedness would climb to 24.1 per cent of its Gross Domestic Product, GDP, by 2018. Nigeria ended 2016 with a debt to GDP ratio of 18.6 per cent while at the end of 2015, Nigeria’s debt to GDP ratio stood at 12.1 per cent, the IMF said.
The Fund made this declaration in its World Economic and Financial Surveys, presented Wednesday.
By the end of 2017, Nigeria’s current indebtedness would have reached 23.3 per cent of the GDP, the IMF said.
Earlier, the National Bureau of Statistics, NBS, had said that Nigeria ’s GDP for the year ended December 31, 2016 stood at N 67 .98 trillion.
By IMF’s projection, Nigeria’s debt to GDP ratio would have surged by 100 per cent, from 12.1 per cent in 2015 to 24.1 per cent in 2018.
There have been growing concerns over Nigeria’s rising debt profile, with analysts raising alarm over the government’s decision to incur more debts.
Earlier, the World Bank had expressed concern over the debt payment to revenue ratio, saying that reduced revenue earnings might render the country’s debt unsustainable.
Yue Man Lee, senior economist at the World Bank office in Nigeria, said Nigeria has to increase its revenue base or work towards balancing the debt profile, hence the debt would be unsustainable.
The slump in the price of oil, Nigeria’s main revenue source, has heightened the government’s borrowing plans.
According to records of the 2017 fiscal year, the sum of N2.35 trillion is expected to be borrowed in the year.
Nigeria’s debt profile is dominated by local debts, which are characterised by high interest rates.
Earlier in February, the Director-General of the Debt Management Office, DMO, Abraham Nwankwo, had said that the nation’s total debt profile as at December 31, 2016 was $57.39 billion (N17.36 trillion).
Mr. Nwankwo, who said the amount included domestic and foreign debts owed by the country as at the end of 2016, noted that the external debt profile stood at $11.41 billion (N3.48 trillion), while the domestic debt stock stood at $45.98 billion (N13.88 trillion).
He pointed out that the domestic debt stock of the Federal Government of Nigeria, the 36 states and the FCT accounted for about 80 per cent of the total debt, while the external debt stock accounted for about 20 per cent.
He, however, assured that though Nigeria’s debt profile was on the increase, it was not in a precarious economic situation that would warrant seeking for debt relief.
“Nigeria is not in a position to beg for debt forgiveness. In spite of the present state of the economy, the country is still counted as a strong economy among other countries. The economic indicators show that Nigeria has a strong economy,” he said.