Nigeria’s Debt-to-Revenue Ratio May Hit 90% In 2022

As the country plans to borrow not less than N6 trillion to fund the 2022 budget,  analysts have said Nigeria’s  debt revenue ratio is most likely to depress to 90 per cent 2022 on the back of heightened electioneering spending.

Analysts at Agusto & Co in the January economic newsletter titled “2022  Neutralising Covid, defining legacy and the clanging cymbals of politics” posited that Nigeria’s debt to revenue is slated to dip further this year, crossing the 80 per cent mark to reach 90 per cent before the end of the year.

Stating that Nigeria “genuinely has a debt sustainability crisis that should lead to new thinking” the analysts, said “the rhetoric of Nigeria’s fiscal policy managers over the last decade has been one that downplays the risks around a widening fiscal deficit that has been largely funded by borrowings.

“Initial defence of the borrowings harped on Nigeria’s benign Debt to GDP levels albeit with less focus on debt service to revenue levels. At Debt to GDP ratio of 30 per cent

Nigeria seems to have what genuinely looks like a benign ratio. But with 76 per cent of the Federal Government’s revenue going into debt service alone in 2021, the country genuinely has a debt sustainability crisis that should lead to new thinking.

“In 2022, we estimate that the debt to revenue ratio will cross the 80 per cent mark and hover between 85 to 90 per cent as election induced spending ramps up. While we do recognise the initiatives to grow fiscal revenues, Agusto & Co is of the opinion that these efforts will not be enough without due consideration to the expenditure element of the fiscal balance equation.

“Plans to more than double the non-debt recurrent expenditure to about N6.9 trillion in 2022 from about N3.5 trillion last year, indicates an absence of fiscal discipline to rein spending largely financed by borrowings. We also believe that this administration will not pursue other deficit financing options particularly disposal of assets in 2022.


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