FG projects 82% of revenue for debt servicing – Report.
The Federal Government has estimated that in 2023, interest payments would account for 82% of its income, according to the International Monetary Fund.
The IMF projects that foreign debt, including private sector debt, would increase to $121.6 billion, while external reserves will increase to $37.5 billion.
This was stated in the document’s “IMF Executive Board Concludes 2022 Article IV Consultation with Nigeria summary,” which included a table of forecasts.
According to the forecasts, interest payments will decrease from 96.3% of government income in 2022 to 82.3% in 2023, which is an improvement over the current situation.
It further said that in 2020 and 2021, respectively, interest payments were 86.1% and 87.8% of the federal government’s income.
The Washington-based lender said that rising debt-servicing expenses posed a short-term negative risk to Nigeria.
Directors expressed their appreciation for the expansion of Nigeria’s economic recovery but highlighted that they had lost the chance to profit from rising global oil prices.
They emphasized the short-term negative risks brought on by high inflation, expensive debt payment, pressures in other sectors, and volatility in the oil market.
In order to ensure macroeconomic stability in the future, the directors advised “decisive fiscal and monetary tightening, together with structural changes to enhance governance, develop the agriculture sector, and promote inclusive, sustainable growth.”
The budget office reports that from January to November 2022, the Federal Government kept N6.5 trillion, of which N5.24 trillion (or 80.62%) was utilized for debt payment.
By 2026, debt payment may consume all of the government’s earnings, according to Ari Aisen, the IMF’s Resident Representative for Nigeria. In the next four years, the whole nation’s profits might be wiped out by interest payments on loans, he said.
“The biggest critical aspect for Nigeria is that we have conducted a macro-fiscal stress test, and what you see is the interest payments as a share of revenue, and as you see us in terms of the baseline from the federal government of Nigeria, the revenue is projected to be taken by debt service by almost 100% by 2026,” he said.
The majority of the federal government’s revenues are now, in fact, 89% and will continue to be absorbed by debt servicing if nothing is done to increase the fiscal space or the amount of revenues that would be required. This is without taking any shocks into account.
“It is a reflection of the nation’s poor revenue. For the nation to be able to have macroeconomic stability, more money has to be raised. For Nigeria, it has now become an existential problem.
The World Bank estimates that by 2027, interest payments on Federal Government borrowings from the Central Bank of Nigeria would consume 62% of GDP.
High debt payment costs, according to Patience Oniha, director general of the debt management office, are deterring infrastructure investment.
“High levels of debt lead to hefty debt service,” she said, “which decreases resources available for investment in infrastructure and important areas of the economy.”
The Federal Government intends to reduce its debt to revenue ratio to 60% in 2023, according to Zainab Ahmed, Minister of Finance, Budget, and National Planning.
At the World Economic Forum in Davos, Switzerland, she claimed that the government’s debt trajectory is manageable in an interview with Bloomberg TV.
“We are sustainable in our debt trajectory,” she said. We have a strategy in place to make sure we can regularly pay off our obligations. Additionally, we are ending gasoline subsidies, which represent a significant expense.
“I am one of the people that helped get us to where we are with the debt stock. Therefore, after we stop providing fuel subsidies, crude oil output will rise, and if we maintain the growth in non-oil income, we should be able to reduce the debt to revenue ratio to 60%.
In order to give financial relief and lower the cost of debt payment, she said, the government was in the process of turning its Ways and Means loans into a 40-year bond.
The public debt of the nation reached N44.06 trillion in the third quarter of 2022, according to DMO.
Hmmm
God will hep
Bad news
God help us
It is well
Amen
Yes we need it
Sure
Hmm
Seriously
Good
Yes
hmmm
Amen!!
Yh
Goood
Mmm
Amen
Amen
Eow
Eow
What
Hi
hmm
Yeah
Job welldone
Keep it up
Cool
Hmmmm
Hello
Okay oo
Bad news
How
Nive
hi
Dog
Interesting
Tjis is too bad
And they say there’s no money in this country. Imagine what Nigeria is owing. It’s alarming.
Very alarming. I must say
Very saddening
Rubies
Bad
Hmmm
Ok ooo
Alright
Ok
This is really shocking and some people are still bankrupting the nation
Hmmmm
Cool
Cool
Ok
Great
Hi
Ok
Cgu
Som
Ok
That’s too bad
Sad
Ok
Ik
Oyanw
Naija sha
Ok
Ok
Hmmmmmm! God help us.
The debt is too high.
Just shows I’m hesd
As expected high lofe
Let’s wait and see the outcome
Okay
Cool
Okay
Hmmm
Good
Government should find solution to it
It must not be going like this
Nice
Na wa
Nice
Wonderful
Ok
Nigeria
Hunger dey o
Your new cook up is ok
Hmmmm, Nigeria!!!
What was the debt used for, the economy is growing worse daily
Good
That’s awesome
Ok
It is well
Having a life te
Ok
Lol When we have money
This people they know what dey are doing
Marvelous
That’s too high
Wow
Hmmm
Base on say na levels
Good
Hi
O.k
Wow
Base on say na level
Okay
Hmm ok
Nice
Wow
Great
Great short article
We have already born here
Dmdn do
Rdghhfff
I was shocked by the news
God will help us sha
Okay
Alright
Lol
God will have mercy on us
Really
God will have mercy on us
This Nigeria sef ????
Hmmm
This Nigeria na cruise
FG and tactical lies
Okay
Hmm
Great ????
Ohh Nigeria
Hmm
Oh
Cool
Nice
God will help them
Debt serving rescue
Better
Ok
Alright