Director-General of the World Trade Organisation (WTO), Dr. Ngozi Okonjo Iweala, on Monday warned incoming state governors against acquisition of debt.
She gave the warning in Abuja during the opening of the 2023 induction for re-elected and elected governors with the theme: ‘Governing for Impact (Building Sub-national Governance), organised by the Nigeria Governors Forum (NGF).
According to Debt Management Office (DMO) in its Q4 report of 2022 fiscaly year, Nigeria’s total domestic debt stock was N27.55 trillion, while external debt stock was N18.70 trillion (US$41.69 billion).
Okonjo-Iweala said: “We have challenges on the fiscal, debt, and monetary policy fronts.
Nigeria’s gross debt level has climbed from N19.3 trillion in 2015 to N91.6 trillion in 2023. The debt-to-GDP ratio has almost doubled from 20 percent to 39 percent over that time period.
“While the debt-to-GDP ratio may not look so alarming, as revenues decline, the burden of debt servicing has increased dramatically. The debt service to revenue ratio is certainly alarming, at 83.2 percent in 2021 and 96.3 percent in 2022, according to the World Bank.
This means that at the federal level, after servicing our debt there is little room to pay for recurrent expenditures, let alone investment. The fiscal deficit of 5.3 percent of GDP is higher than our agreed fiscal rule of three percent of GDP. This has to be carefully monitored and brought down. Dealing with the fiscal deficit will of course be infinitely more difficult with an oil subsidy bill of N3.36 trillion for the first half of 2023 (or N6.72 trillion if it is not removed).”
Continuing, she disclosed that “the deficit is made worse by revenue losses from oil theft. The difficulties around this issue underscore the importance of political consensus – whether you are in government or in the opposition – on policies critical for nation-building.
