Analysis: How Poverty, Insecurity is Crippling Nigeria’s Economy and Businesses
Last week, the Economist Intelligence Unit (EIU) said Nigeria’s debt service-to-revenue ratio has become the highest in the world, as the amount spent by the Federal Government on servicing debts exceeded what it earned in the first four months of this year. “The debt service/revenue ratio of 118.9 percent in January-April is the world’s worst and underlines unsustainable fiscal policy,” note the analysts at the EIU.
According to the report, Nigeria’s Federal Government debt service payments in the first four months of 2022 totalled N1.9 trillion, which was greater than its total revenue of N1.6 trillion, according to the 2023‑2025 Medium-Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) draft presented by the Ministry of Finance, Budget and National Planning, on July 21.
This did not come as a surprise as experts have warned the government on the level of borrowing. Personally, I have argued that Debt-to-GDP ratio is misleading, it is only logical to borrow against your revenue.
Photo courtesy of Photo RNW.org.