It is no longer news that Nigeria intends to take additional loans in the coming years to close budget gaps.
The news is that in the next three years,(2022-2024) the Nigerian government has planned to borrow N15 trillion from external and domestic sources.
This plan is contained in the approved 2022-2024 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP), and analyzed by Ripples Nigeria.
According to the document’s breakdown, N4.89 trillion in new foreign and domestic borrowings would be secured in 2022.
N2.44 trillion of the 2022 loans will come from the domestic market in the form of Treasury bills and bonds, among other, while the remaining N2.446 trillion will come from external sources such as the International Monetary Fund, World Bank, Eurobonds, and China, among others.
In 2023, Nigeria’s election year, the country intends to borrow N4.75 trillion. This indicates that the country’s overall debt will reach N43 trillion by the time the current administration leaves office.
Read also: Senate approves $8.4bn, €490m borrowing plan
A breakdown from the document shows that the government intends to borrow, N2.37 trillion from Domestic sources and also N2.37 trillion from external sources in 2023.
In 2024, Nigeria will hit a new milestone in loans as the country will seek N5.35 trillion new borrowings to finance the year’s budget deficit.
Breakdown of 2024 loans shows that Nigeria will seek 2.67 trillion from domestic sources and another N2.67 trillion from external sources.
Despite the rising debt, the document prepared by the ministry of finance noted that there is no cause for worries.
Part of the document reads ‘The ratio of Nigeria’s Total Public Debt as a percentage of GDP remained sustainable at 21.61% as at December 31, 2020.
“Also, the ratio was below Nigeria’s country specific Debt Limit of 40% (2020 to 2023), and below the revised WB/IMF’s recommended threshold of 55% for Nigeria’s peer group, and ECOWAS convergence threshold of 70 percent.
“Total public debt will be kept within our self imposed debt sustainability threshold of 40 of GDP to ensure debt sustainability. Government will consider setting other prudential limits like Debt Service/Revenue Ratio to ensure continuing sustainability of FGN’s debts. Government will also negotiate a break on debt service with the Central Bank of Nigeria.
“Borrowing will be from domestic and external sources but a larger proportion of new borrowing will be from domestic sources using longterm instruments while for External Borrowing, concessional funding from multilateral and bilateral sources,” the document noted.
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