The Debt Management Office (DMO) has revealed that Nigeria’s total public debt rose to 28.62 trillion naira ($79.5 billion) as of March, up 15% from a year earlier.
The Nigeria, largest economy in Africa has been building up debt to fund infrastructure projects and boost a sluggish economy now projected to fall into recession following the impact of an oil price crash triggered by the coronavirus pandemic.
Total public debt stood at 24.94 trillion naira in the first quarter of 2019.
Nigeria had a series of debt issues lined up this year before the collapse in oil prices, the country’s main export, forcing the government to shelve foreign commercial borrowing.
The Nigerian government is now focusing on domestic markets and concessionary loans to help fund its 2020 budget deficit which has been worsened by the lower oil prices that slashed revenues and weakened the naira currency.
But, this has resulted in rising cost of debt servicing has had negative impact on the economy.
The debt Management Office also disclosed in it’s statement that the government spent 609.13 billion naira ($1.69 billion) to service domestic debt in the first quarter of 2020.
A director at ratings agency Fitch told Reuters last week that a sharp rise in Nigeria’s sovereign debt and a ballooning financing gap could trigger a rating downgrade.
According to Reuters News, Fitch stated that Nigeria’s debt to revenue ratio is set to worsen to 538% by the end of 2020, from 348% a year earlier, before improving slightly next year.
