Nigerians are increasingly worried as the country's total debt load approaches N80 trillion.
According to stakeholders, Nigeria's economy is in danger of collapsing and is in an emergency scenario.
Economic analysts have always raised the alarm about Nigeria's rising debt profile, despite the Debt Management Office's repeated denials of those concerns.
According to DMO's Fourth Quarter 2022 report, Nigeria's overall debt is estimated to be around N46.25 trillion.
As of December 2022, the overall stock of domestic debt was N27.55 trillion, while the stock of overseas debt was N18.70 trillion (USD 41.69 billion).
The nation's external and internal wealth may have reached N80 trillion as a result of the recent borrowing binge by the federal government and the National Assembly's confirmation of the Central Bank of Nigeria's way-and-means advance to the federal government.
The nation's debt load had risen from N12.6 trillion at the start of President Muhammadu Buhari's administration in 2015 to over N80 trillion as the government gets ready to leave office on May 29.
It is clear that throughout the eight years Buhari was in office, borrowing to cover annual budget deficits became the norm. According to a study of statistics from the Debt Management Office, or DMO, the anticipated budget deficits in this country from 2015 to 2023 are estimated to be approximately N47.73 trillion.
The budget deficit in Nigeria increased by 370.54 percent, from N2.41 trillion in 2016 to N11.34 trillion in 2023.
Right now, determining whether the nation is debt-trapped or debt-hooked is a semantic exercise.
Recall that the World Bank estimated that in 2022, Nigeria will spend 96.3% of its revenue on debt servicing.
Mrs. Zainab Ahmed, Minister of Finance, Budget, and National Planning, disagreed with the World Bank estimate. She explained that in 2022, debt service accounted for 80.6% of Nigeria's total revenue. Whatever number one chooses to use, a sizeable portion of the country's income is being consumed by debt.
The DMO is yet to reveal the debt figures as of March 31, 2023, according to Patience Oniha, the director-general of the organisation, who spoke to Daily Post on Monday.
She stated, "The figures as of March 31 have not been published."
The Chief Executive Officer of SD & D Capital Management, Mr. Idakolo Gbolade, however, lamented that the departing administration had been funding its budgets with loans since 2015.
In order to prevent a financial catastrophe, he urged the new administration to explore options for restructuring and negotiating the country's debt.
"Since 2015, the outgoing administration has financed the budget with loans, leading to the untenable loan position the nation is currently carrying.
"We had been steadily adding to the debt pile, despite declining revenue. Major Due to uncertainty and improper project prioritising, major infrastructure projects that have been completed or are now being completed lack the ability to repay loans.
"Projects like the rail network are having trouble generating enough income because of security issues. Since they are not tolled, other projects like highways are not economically viable.
"Investments in aviation have not generated enough income to repay the debts necessary to fund their completion.
"Due to the securitization of the facility's ways and means to the tune of N22.7 trillion, the debt stock has expanded to 77 trillion in the face of insufficient revenue to cover current debt.
"The new government must act quickly to address Nigeria's dangerous debt situation.
To provide breathing room for infrastructure expansion, the current debt must be negotiated and the repayment schedule restructured.
He remarked, "Instead of financing major projects primarily through additional loans, the government should also look at Public Private sector initiatives."
Prof. Godwin Oyedokun, a professor of accounting and financial development at Lead City University in Ibadan, also bemoaned the fact that the current administration had mortgaged Nigeria.
He believes that the Buhari administration's amount of debt is humiliating and frightening.
He said he wasn't sure how the rot would be handled by Bola Ahmed Tinubu's upcoming administration.
The future of our next generations has been mortgaged by the current administration.
"The fact that we are in this circumstance is disturbing.
Debt management is a major concern for the upcoming administration. The fact that the incoming government is a component of the outgoing government is advantageous.
"Due to our high debt level, we will have to keep using our future revenues to pay off this debt.
Future earnings will undoubtedly fall short of meeting government expenses, he declared.
Economic scholars contend that in order for the federal government to avoid financial difficulty, equity financing—rather than asset financing—must be considered....