The International Monetary Fund (IMF) on Monday reported that Nigeria’s foreign liabilities stood at $187.36 billion while the country’s foreign assets amounted to $102.15 billion as of December 2020,.
Foreign assets are the investment securities owned by a national government, companies, or citizens in foreign countries while foreign liabilities are assets owned by foreign governments, corporations and individuals in another country.
According to available data on Nigeria’s foreign assets and liabilities profile, from 2016, the nation’s foreign liabilities increased by 42.41 percent from $131.56 billion, while foreign assets rose by 13.67 per cent from $89.87 billion.
These figures place Nigeria’s Net International Investment Position (NIIP), which is foreign assets less liabilities, at -$85.21 billion as of December 2020.
Corporate Finance Institute, a Canadian finance repository, stated that a positive NIIP makes a country a net creditor while a negative NIIP implies that the country is a net debtor.
CFI further indicated that the NIIP reflected a measure of a country’s financial condition and its sustainability to take on more financial credit.
Based on this analysis, Nigeria’s net foreign liabilities standing at -$85.21 billion indicated that foreigners own more assets in Nigeria than the value of foreign assets owned by the national and state governments, Nigerian-owned companies and citizens.
To understand Nigeria’s creditworthiness, the IMF measures the NIIP as a percentage of a country’s GDP. With a GDP of $432.30 billion (World Bank), Nigeria’s NIIP stood at -19.71 per cent as of December 2020.
The European Commission’s Directorate-General for Economic and Financial Affairs Alessandro Turrini and Stefan Zeug, had in a 2016 paper titled ‘Benchmarks for Net International Positions’ stated that the median value of NIIP norms which account for balance of payments and consistency with healthy financial position is set at -17 per cent of GDP.
At -19.71 per cent, Nigeria’s current account deficits due to lower earnings from oil revenues in 2020 places the country below the benchmark.