Despite the backlash that trailed Nigeria’s consistent borrowing, the country has one of the lowest debts to Gross Domestic Product (GDP) among peers.
Latest data from National Bureau of Statistics (NBS) showed that states and federal debt portfolio as of March 31 stood at N33.11 trillion and nominal GDP of N152.32 trillion as of December 31, 2020.
When Nigeria’s national debt is broken down in relation to GDP, it stood at 22 percent.
Nigeria’s debt-to-GDP ratio of 22 percent compares favorably with other emerging countries such as South Africa (77 percent), Kenya (68.6 percent), and Vietnam (46.6 percent).
United Arab Emirates (UAE)’s debt to GDP is 38.33 percent while Brazil has 98.94 percent.
Other nations with similar economic characteristics as Nigeria including Mexico, Indonesia, and Turkey also have a higher debt to GDP ratio than Nigeria.
Mexico debt to GDP ratio stands at 60.59 percent as of the December 31, 2020 while Indonesia and Turkey have 36.62 percent and 36.77 percent respectively.
However, economists have continued to argue that the debt to GDP ratio does not fully reflects the true state of countries’ finances.
However, a study by the World Bank found that only countries whose debt-to-GDP ratios exceed 77 percent for prolonged periods experience significant slowdowns in economic growth.
The Economic Community of West African States (ECOWAS) pegged the maximum debt limit for West African countries at 70 percent.
By: David Ibemere
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