Worries as Nigeria’s debt to GDP ratio crosses 50% for the first time

Worrying signs have emerged as Nigeria’s debt-to-Gross Domestic Product (GDP) ratio crossed 50% for the first time ever last week.

The Debt Management Office (DMO) revealed this in a data released during the period.

The debt-to-GDP ratio is the metric used for measuring a country’s public debt to its GDP.

According to the DMO, Nigeria now has a public debt portfolio of N121 trillion, comprising domestic debt of N65.6 trillion and a foreign debt portfolio of $42.1 billion (N56 trillion).

As of December 2023, Nigeria’s total GDP was N229.9 trillion and with a debt profile of N121 trillion, this shows that the country’s debt-to-GDP ratio is now above 50% for the first time.

Over the years, Nigeria has prided itself on its ‘low’ debt-to-GDP ratio which it identifies as a sign of the country’s economic resilience.

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This suggests there was more room to expand its borrowing capacity.

However, recent figures show that worrying times are ahead.

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.

However, in the second and third quarters of 2023, the nominal GDP figures were N52.1 trillion and N60.6 trillion respectively.

The fourth quarter GDP rose to N65.9 trillion, making the trailing four-quarters GDP total N237.5 trillion.

Based on the 2023 GDP figure of N229.9 trillion, Nigeria’s debt-to-GDP ratio is 52.9%, marking the first time the country has reached such a high debt-to-GDP figure.

By: Babajide Okeowo

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