Peter Obi, a former presidential candidate, has warned that Nigeria’s accumulated debt profile may surpass N150 trillion by the end of this year if not properly managed.
He argued that “borrowing is not inherently problematic” inasmuch as its essence is to boost productivity and enhance economic growth and development.
Obi raised the alarm in a series of tweets on his X handle on Monday, asserting that the volume of borrowings recorded in the first quarter of 2024 calls for prudent management of government finances.
“The recent report at the end of the first quarter indicates a significant increase in our government’s borrowing, reaching a staggering N121.86 trillion,” Obi said.
“This rapid accumulation of debt is alarming, and if this borrowing trend continues at the current rate, we can expect the total to surpass N150 trillion by the end of the year,” he added.
Obi’s call came after the Debt Management Office released Nigeria’s total debt stock, revealing that the country’s debt profile rose by N24.33 trillion in the first three months of 2024 to N121.67 trillion from N97.34 trillion as of December 2023.
The Abuja-based institution, acknowledging that Nigeria’s borrowing will continue as stipulated in the 2024 Appropriation Act, “expects improvements in the Government’s Revenue to enhance debt sustainability.”
Analysts Data Services and Resources (ADSR), a research and data intelligence firm, said Nigeria’s debt-to-GDP ratio at 48.68% is almost hitting a 25-year high, raising concerns about the country’s fiscal and public debt sustainability.
“At 48.68% Debt-GDP ratio in 2024’Q1, the country’s debt situation is looking more like the pre-debt relief years,” analysts at ADSR said.
The former Anambra governor, however, stated that borrowings are important to carry out huge government projects, asserting that when misallocated or used wrongly, it affects the country’s overall economic well-being.
“It is essential to ensure that borrowed funds are allocated efficiently and effectively to drive economic growth, create jobs, and improve the standard of living of the majority of our citizens,” he said.
He however called for a detailed breakdown of how the funds have been used and its impact on the country’s economic trajectory. This, according to him, will help bolster accountability, transparency and good governance.
Obi also urged the government to exercise caution and prudence in managing Nigeria’s debt, maintaining that borrowing is utilized for productive purposes that benefit the economy and citizens.
“Our future stability and prosperity depends on prudent management of resources,” the former Labour Party presidential candidate said.