According to a macroeconomic snapshot released by KPMG, urgent actions need to be explored to significantly raise revenue in Nigeria to prevent the risk of sliding into critical debt servicing problems.

The professional services firm expressed concerns regarding the recent Senate approval of the securitization of N22.7 trillion Ways and Means advances provided to the government by the Central Bank of Nigeria (CBN).

KPMG stated that Nigeria’s debt, which reached N46.3 trillion by the end of 2022, would immediately rise to about N70 trillion.

With the expected new borrowings of N8.8 trillion from both domestic and external sources in the 2023 budgets, KPMG predicted that the total debt stock would likely reach approximately N77.8 trillion by the end of 2023.

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The firm highlighted that Nigeria’s debt service-to-revenue ratio was already at 80.6 percent in 2022, significantly surpassing the World Bank’s suggested ratio of 22.5 percent for low-income countries like Nigeria.

KPMG warned that without urgent measures to build revenue, Nigeria’s debt service to revenue ratio may exceed 100% in 2023, limiting the government’s ability to fund its operations and functions.

The firm acknowledged the challenges of a transition year and suggested that the new administration might need to borrow even more to stimulate growth.

KPMG advised the government to establish well-thought-out guidelines and frameworks for borrowing, focusing on sustainable debt management and prioritizing investments with long-term economic returns to maintain the country’s credit rating and borrowing confidence.