Nigeria spends 50% of GDP value on debt, lower than Egypt, Ghana, S/Africa

Nigeria may have cross the threshold of over 50 per cent of debt to Gross Domestic Product (GDP) ratio for the first time ever, but it feels like some succour that peer countries like Ghana in 2023 had a debt-to-GDP ratio of about 84.9 per cent, while South Africa’s ratio stood at 72.2 per cent. Kenya and Egypt had ratios of 70.1 per cent and 95.8 per cent, respectively.
Nigeria’s debt-to-GDP ratio crossed 50 pet cent for the first time ever last week after the Debt Management Office published the country’s latest public debt figures.
Ordinarily, crossing the 50 per cent mark should not be a problem but, 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, said Nairametrics.
Also, the challenge has always been Nigeria’s ability to meet its debt service obligations due to its high debt service-to-revenue ratio.Now, with Nigeria’s debt-to-GDP ratio surpassing 50 per cent and continuing to rise, the country has limited room to further expand its borrowing capacity while grappling with current economic challenges.
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.
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 per cent, marking the first time the country has reached such a high debt-to-GDP figure.Using the trailing four-quarter GDP figure of N237.5 trillion, the country’s debt-to-GDP ratio also stands at 51.2 per cent.

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