Isaac Anumihe, (Abuja), Merit Ibe and Chinwendu Obienyi
National Bureau of Statistics (NBS) has put Nigeria’s total public debt portfolio at N28.63 trillion with Lagos State accounting for 10.8 per cent of total domestic debt stock while Yobe State has the least debt stock in this category with 0.7 per cent.
According to the document published in its website, the figure which is for both the state and the Federal Government includes N4.11 trillion domestic debt allocated to states and Federal Capital Territory (FCT) whilst N9.99 trillion or 34.89 per cent of the debt is external, with N18.64 trillion or 65.11 per cent of the debt is domestic.
“Nigerian states and federal debt stock data as at March 31, 2020 showed that total public debt portfolio stood at N28.63 trillion. A further disaggregation of Nigeria’s total public debt showed that N9.99 trillion or 34.89 per cent of the debt was external while N18.64 trillion or 65.11 per cent of the debt is domestic.
Just as the Q1: 2020 debt statistics report by the National Bureau of Statistics (NBS) showcased a sustained increase in the Federal Government’s debt profile, experts have said Nigeria’s debt sustainability could deteriorate quickly at the end of this year.
According to analysts at Afrinvest, considering the revenue shock brought by COVID-19 and the resulting record fiscal deficit, the FG’s debt sustainability is set for a decline in 2020.
The nation’s total public debt portfolio, all the states and the FG inclusive, stood at N28.63 trillion as at March 31 this year, translating to a 4.48 per cent rise compared to the N27.40 trillion recorded in Q4 2019, with debt to GDP ratio at 19.3 per cent (2019: 19.0 per cent) based on annualised Q1 data.
In Afrinvest’s view, the Q1:2020 debt data already provided insight into what to expect with debt service to revenue ratio at 99.2 per cent for the government.
According to them “Beyond Q1, there has been little improvement as revenue performance between January and May 2020 was N1.5 trillion, 44.0 per cent lower than projections. With a N301 billion increase in 2020 expenditure to N10.8 trillion to support Nigeria’s COVID-19 response, fiscal deficit is expected at N5.0 trillion in 2020 or 3.6 per cent of GDP, beyond the 3.0 per cent threshold established by the Fiscal Responsibility Act. We estimate that this would raise public debt to GDP to 24.6 per cent from 19.0 per cent in 2019”.
The researchers further opined amid the revised 2020 budget, the 2021-2023 Medium-Term Expenditure Framework (MTEF) proposes aggressive borrowing plans as the fiscal deficit is expected to reach N5.2 trillion in 2021, driven by revenue and expenditure projections of N7.0 trillion and N11.9 trillion respectively.
“Without measures to increase revenue and rein in spending through cuts to energy subsidies, we believe FG’s debt sustainability would deteriorate quickly”, they added.
Meanwhile, the LCCI has forecasted Nigeria’s economy could slip into recession by the end of the third quarter of 2020, going by fallouts of the pandemic. The Chamber noted that disruptions to global supply chains, lockdown, travel restrictions, weakening oil prices, foreign exchange liquidity challenges and weak export which were negative pointers, would manifest in the second quarter, with more pronounced impact on sectors struggling with growth.
LCCI President, Toki Mabogunje, who made the forecast yesterday at its 3rd press briefing on state of the economy in 2020, in Lagos, said as the pandemic protracts and commercial activities remain subdued, the economy could slip into recession by the end of the third quarter.
In its analysis of the GDP growth, the Chamber noted that the economy grew by 1.87 percent in the first quarter, which marks lowest first quarterly growth level since the post-recession period, and a moderate slowdown from 2.1per cent recorded in the corresponding period of 2019, which showed that 21 sectors recorded moderation in growth; 13 sectors contracted; eight sectors expanded, and the remaining four sectors were in the recessionary territory.