Recently released figures from the Debt Management Office show that Nigeria’s debt profile increased by 33% from N12.6 trillion to N16.3 trillion between December 2015 and June 2016. This is even as the ‘real’ value of the debt in dollars reduced within the same period., from $65.43 billion in 2015 to $61.45 billion in 2016. The reason for this anomaly is the plunge in the value of the Naira within the same period.
A breakdown of the document showed that external debt by States and the FG was N3.19 trillion while FG domestic debt was N10.61 trillion. Lagos, Delta, Cross River and the FCT top the States’ debtors list.
Another important indicator in this regard id the debt to GDP ratio, which previously stood at 13.02% as at 2015 ending. However, in 2016, it has risen to 16.83%. however, due to contraction in the economy, and if what Prof. Charles Soludo said when briefing APC governors in August is anything to go by, then, the new GDP to debt ratio would be 20.7%.
The consequences of this is that Nigeria’s credit ratings may be downgraded resulting in less chances of obtaining loans from foreign sources.
Parts of this article originally appeared in The Cable News.