Nigeria’s debt to GDP ratio at 23%, below the 40% limit- DMO

Nigeria’s Debt Management Office (DMO) has stated that Nigeria’s debt to GDP ratio is 23%, which is still within the country’s self-imposed limit of 40%.

This director-general of the DMO, Patience Oniha, said this on Tuesday during an executive course on budgeting and fiscal responsibility organised by the Fiscal Responsibility Commission in Abuja.

She also added that one way to reduce budget deficits is to grow revenues and  to prioritise expenditure and cut waste and leakages.

What she said:

Oniha noted that a larger percentage of Nigeria’s borrowings were concessionary loans from multilateral and bilateral sources, citing that Nigeria’s debt to GDP ratio was 23%, which is still within the country’s self-imposed limit of 40%.

She added that the figure was also within World Bank/IMF recommended a limit of 55 %for countries within Nigeria’s peer group and 70 percent for ECOWAS countries.

Oniha also noted that Nigeria had run deficit budgets for many decades, which made borrowings from local and external sources imperative.

“A budget may be surplus, balanced, or deficit. Nigeria has run deficit budgets on a consecutive basis for decades.

“The financing of the deficits through borrowing from local and external sources is the principal reason for the growth in debt stock and debt servicing.

“One way to reduce budget deficits is to grow revenues; the other way is to prioritise expenditure and cut waste and leakages,” she said, noting that despite low revenue, government was able to deliver on infrastructure development and other responsibilities through borrowings.

“Debt levels are rising everywhere. Global revenue dropped as a result of Covid-19, and the Russian-Ukraine conflict has also increased borrowings.

“Our problem is debt service to revenue ratio,” she said.

What you should know

Nairametrics reported last week that the DMO  stated that  Nigeria’s total public debt stock, rose to N42.84 trillion (103.31 billion dollars) in June 2022 from N41.60 trillion (100.07 billion dollars) in the previous month.