The World Bank has stated that Nigeria’s revenue projections of N9.73 trillion will be insufficient to pay/service its debt by 2023 because debt servicing will consume more than 100% of federal government earnings.
This was revealed by Alex Sienaert, the World Bank’s new Lead Economist for Nigeria, in a presentation titled “Nigeria Public Finance Review: Fiscal Adjustment for Better and Sustainable Development Results.”
According to Sienaert, by the end of 2022, Nigeria’s debt servicing would consume 100.2 percent of Federal Government revenue.
This was a decrease from the earlier forecast in the October Africa’s Pulse report, which is a biannual analysis of the region’s near-term macroeconomic outlook, published during the World Bank/IMF Spring and Annual Meetings in April and October.
The Washington-based bank stated in the Africa’s Pulse report that Nigeria’s debt service to revenue ratio could reach 102.3 percent by the end of 2022, describing Nigeria’s public debt as concerning due to the rising debt service-to-revenue ratio.
However, the situation would worsen in 2023, with debt surviving exceeding 118% of revenue reported in the first four months of 2022.
The World Bank’s lead economist for Nigeria stated in his presentation document that borrowing more money was not the solution for Nigeria.
In part, the document stated: “Borrowing more is not the solution: debt costs are rising rapidly, squeezing non-interest spending.
“Debt servicing has surged over the past decade and is expected to continue increasing over the medium-term, crowding out productive spending.”
