Worried about the nation’s surging debt stock and its negative implications for public finance efficiency, investment analysts at Proshare Limited have advised the federal and state governments to explore revenue-generation opportunities as a fiscal option to minimize the debt service burden on the country.
The economic researchers at the firm, which is one of the leading investment research consulting services providers in the country, gave this charge in the firm’s just issued ‘Analysts’ Note sourced by our correspondent.
Citing recent statistical data from the Debt Management Office, the World Bank Group, and National Bureau of Statistics (NBS) to justify their position on the nation’s debt crisis, the investment experts maintained that it was no longer fiscally desirable or sustainable to keep borrowing to finance projects and programmes for national development.
As a way out the debt trap, the analysts canvassed: “The government urgently needs to explore other revenue-generating opportunities to reduce borrowing to avoid higher debt servicing costs”.
They noted that that the DMO a few days ago reported that Nigeria’s total debt stock had increased to N44.06 trillion as of September 2022 from N38.00trn in September 2021.
According to the DMO, the total external debt accounted for N17.15 trillion, and the total domestic debt was N26.92 trillion against N15.57 trillion and N22.43 trillion in September 2021, representing a quarterly increase of +2.85% from N42.84 trillion in Q2 2022 to N44.06 trillion in the third quarter of this year.
During the period under review, Nigeria’s domestic debt servicing stood at N820.59 billion while US$801.23 million was spent on external servicing in Q3 2022.
It would be recalled that the World Bank had predicted that the country’s debt stock might be considered sustainable now but is vulnerable and costly.
Thus, the Washington D/C-based development finance institution estimated that debt servicing might gulp 100.2% of the government revenue in 2022 and 123.4% in 2023, eventually squeezing the non-interest spending.
