FG gross debt to rise 92% to N136 billion in 2026, IMF says
The federal government’s gross debt profile is expected to increase by 92.11%, from 70.85 billion naira in 2022 to 136.11 billion naira in 2026, according to the International Monetary Fund.
The Washington-based lender made the projection in a report titled “Nigeria Staff Report for the 2021 Article IV Consultation.”
According to the Fund, the Federal Government and public sector gross debt figures include Central Bank of Nigeria overdrafts, promissory notes and AMCON debt. This means that debt, including ways and means, has been factored into the government’s total debt profile.
The Debt Management Office estimated that Nigeria’s public debt stood at N38 billion at the end of September 2021.
In its latest report, the IMF said the projections came from Nigerian authorities and staff estimates and projections.
In a table titled “Nigeria: Federal Government Operations, 2017-26”, the IMF said that Federal Government debt is expected to reach tn 70.85 in 2022, tn 83.17 in 2023, tn 97.80 in 2024, 115.38 tn in 2025, and N136.11tn in 2026.
The IMF said: “Nigeria’s public debt level has risen sharply over the past year due to the COVID-19 crisis. Public debt had followed an increasing trajectory over the past decade, reaching 29% of GDP in 2019 from 9% in 2009, due to primary deficits, as weak non-oil revenue mobilization failed to offset the decline oil revenues.
“In 2020, the sharp decline in oil revenues further increased public debt to 35% of GDP. The debt-to-GDP ratio is projected to rise over the medium term to 43% of GDP, despite favorable growth and interest rate dynamics. Gross financing needs are expected to increase to 8.9% of GDP in 2021, from 7.3% in 2020, and 11.4% in the medium term.
He added that although interest payments accounted for only 2% of GDP in 2020, about 89% of federal government revenue was spent on interest payments, reflecting the low domestic revenue mobilization capacity.
He said the government’s interest-to-revenue ratio is expected to decline slightly to about 86% in 2021 before reaching 139% by 2026.
During the outlook period, the Washington-based lender also expects government spending to increase by 69.91%, from 17.24 billion naira in 2022 to 29.29 billion naira in 2026.
It also forecasts public expenditure of 18.57 tn in 2023, 21.51 tn in 2024, 25.24 tn in 2025 and 29.29 tn in 2026.
Recurrent expenditure will account for the bulk of government expenditure, reaching N13.59 billion in 2022, N14.69 billion in 2023, N17.47 billion in 2024, N20.67 billion in 2025 and 24, 12 billion naira in 2026.
While capital expenditure will only be a fraction of expenditure, accounting for 3.65 billion naira in 2022, 3.88 billion naira in 2023, 4.04 billion naira in 2024, 4.57 billion naira in 2025 and N5.18 billion in 2026.
Even if spending increases, projected government revenues pale in comparison to spending. According to the IMF, total government revenue is projected to be 5.23 billion naira in 2022, 6.25 billion naira in 2023, 6.87 billion naira in 2024, 7.66 billion naira in 2025 and 8.57 billion naira. billion naira in 2026.
It expects the CBN to fund federal government spending with 12.01 tn in 2022, 12.32 tn in 2023, 14.64 tn in 2024, 17.58 tn in 2025 and 20.73 tn in 2026 , leaving a budget deficit of 34.57 tn. for five years.
According to the Washington-based lender, the CBN is expected to help the federal government finance its budget with 5.63 tn in 2022, 5.36 tn in 2023, 6.45 tn in 2024, 7.69 tn in 2025 and 8.35 tn. tn in 2026. .
In January, the President, Major General Muhammadu Buhari (Retired) signed into law the 2022 budget. The budget calls for government expenditure of up to N17.13 billion.
During the presentation of 2022 in 2021, Finance Minister Zainab Ahmed forecast a revenue target of 10.7 billion naira for the financial year 2022.
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