Nigeria’s public debt portfolio could touch N34 trillion, around 23 per cent of its gross domestic product, by year end as Africa’s biggest economy continues to rack up debts and prepares to take a consolidated $1.8 billion credit from a couple of multilateral lenders, the Lagos Chamber of Commerce and Industry (LCCI) said Tuesday.
Its public debt stock climbed to N31 billion in second quarter, eight per cent larger than the preceding quarter, Toki Mabogunje, LCCI’s president, told attendees at the board of trade’s annual general meeting in Lagos, citing new local and foreign borrowings made to bridge the yawning funding gap in the revised 20202 budget following the coronavirus crisis.
“At the peak of the pandemic in the second quarter, the Federal Government received financial support worth $3.4bn and $288.5m from the International Monetary Fund and the African Development Bank respectively, while negotiations are also on-going for a cumulative $1.8bn credit support from the World Bank, AfDB and Islamic Development Bank.”
Nigeria’s debt burden is increasingly unsustainable, its debt-to-revenue ratio touching 99% this March before easing to 72% in May, both figures well above the World Bank’s benchmark of 22.5%.
They remain grim milestones regardless of the reduction in the figure for May, considering that the amount of money the Nigerian government spent on debt service last year was lower at 60 per cent.
“The high level of debt servicing continues to hinder robust investments in hard and soft infrastructures which are key to stimulating productivity and improving living standards,” Ms Mabogunje said.
“While we commend policymakers for their interventions in reflating the economy and supporting businesses, we urge that special attention be given to sectors severely impacted by the pandemic.
“The federal and state governments need to expeditiously redirect attention to these sectors including aviation, hospitality, entertainment, and manufacturing.
“This has become necessary to protect jobs, preserve investments and provide the much-needed liquidity required to revive these sectors,” she added.
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