The Nigerian Public Debt Picture in 2024: Outlook and Challenges
The recent announcement by the Director-General of the Office of Debt Management (OMD), Patience Oniha, on Nigeria’s increasing public debt has sparked a lively debate on the future prospects of the country’s economy . According to Oniha, the total debt, comprising the external and internal debts of the Federal Government, the 36 states and the Federal Capital Territory (FCT), stood at about N121.67 trillion ($88.41 billion) in March 2024. This significant increase compared to December 2023 figures reflects a growth in domestic debt caused by the need to close the 2024 budget deficit and instability in the foreign exchange market during the first quarter.
The implications of this rise in public debt raise concerns about the sustainability of Nigeria’s financial position. While the government has justified the increase as necessary to finance fiscal spending and ensure economic stability, some experts are concerned about the long-term impact of this growing debt on the country’s economy. Relying on borrowing to finance the budget deficit may compromise the government’s ability to invest in key sectors such as education, health and infrastructure, which could hamper long-term economic growth.
Additionally, the focus on domestic debt poses challenges in terms of financial sustainability, as it may lead to increased reliance on domestic markets for financing, thereby exposing the economy to risks related to fluctuation interest rates and inflation. The recent resort to monetizing a portion of central government cash advances to the Central Bank of Nigeria raises concerns about the viability of this strategy in the long term.
To address these challenges, it is imperative that the Nigerian government adopt more transparent and sustainable fiscal and financial policies, with emphasis on diversifying the economy and promoting alternative sources of revenue. Good governance, the fight against corruption and the efficient management of public resources are essential to ensure efficient use of borrowed money and to stimulate economic growth.
In conclusion, Nigeria’s public debt picture in 2024 raises critical questions about the country’s financial viability and its ability to deliver sustainable economic development. It is crucial that the government adopts proactive measures to effectively manage debt, promote transparency and financial accountability, and create an environment conducive to long-term economic growth. A strategic and balanced approach is essential to ensure a stable and prosperous future for Nigeria and its citizens.