The Debt Management Office (DMO) predicts that Nigeria’s total public debt could reach N81.64tn this year, based on its 2022 Debt Sustainability Analysis Report.

The report reveals that the increase in total public debt-to-GDP ratio from 23.4% in September 2022 to 37.1% in 2023 is primarily attributed to the inclusion of an estimated N8.8tn 2023 debt, the government’s Ways and Means debt of over N23tn, and an estimated issuance of N2.87tn in Promissory Notes.

As of December 2022, Nigeria’s total public debt stood at N46.25tn, indicating a potential increase of 76.52% this year.

The DMO has raised concerns about the Federal Government’s projected revenue of N10tn for 2023, emphasizing that it cannot support further borrowing.

The projected debt service-to-revenue ratio of 73.5% for 2023 is deemed high and poses a threat to debt sustainability.

The report suggests that the government’s current revenue profile is insufficient to support increased borrowing and recommends raising the revenue from N10.49tn to approximately N15.5tn to achieve a sustainable debt service-to-revenue ratio.

Although Nigeria’s debt stock is within sustainable limits at 37.1%, the DMO warns that the country is approaching its self-imposed debt limit of 40%, limiting its borrowing capacity.

The DMO recommends caution in borrowing, even though there is a borrowing space of 2.9% (around N14.66tn) due to the self-imposed limit.

It suggests exploring alternative means of financing capital projects, such as encouraging private sector involvement through Public-Private Partnership schemes and considering the privatization or sale of government assets.