BREAKING: Nigeria’s debt to GDP ratio crosses 50% for the first time

According to the DMO, Nigeria now has a public debt portfolio of N121 trillion, consisting of domestic debt of N65.6 trillion and a foreign debt portfolio of $42.1 billion (which converts to N56 trillion when converted to Naira).

As of December 2023, Nigeria’s total gross domestic product (GDP) was N229.9 trillion in nominal terms, though it grew by only 2.74% in real terms. This suggests that the country’s debt-to-GDP ratio is now above 50% for the first time.

In the first quarter of 2024, Nigeria recorded a nominal GDP of N58.5 trillion, up from N51.2 trillion in the corresponding period in 2023.

Why this matters: Nigeria has often viewed its ‘low’ debt-to-GDP ratio as a sign of the country’s economic resilience, suggesting there was more room to expand its borrowing capacity.

Nigeria’s debt profile has risen over the last 8 years as the country faced a string of fiscal challenges brought about by low crude oil proceeds amid rising budgetary expenditure.

Global ratings agency, Moody’s also stated that Nigeria’s interest spending on debt might consume up to 36% of the federal government’s revenue in 2024.  

According to the firm, the hawkish monetary policy stance of the CBN has pushed interest rates for local borrowing by the federal government from an average of 12.8% in 2023 to around 19% in the first five months of 2024.