PricewaterhouseCoopers International Limited (PWC) has raised the alarm that Nigeria’s public debt hit N121.67tn in the first quarter of 2024, saying that the country’s fiscal deficit is above the 3 per cent threshold of the Fiscal Responsibility Act (FRA).

PWC said the debt issuance without a commensurate rise in revenue-generating investments may hurt private investors.

The professional services firm stated its position in its outlook titled, ‘Nigerian Economic Outlook, June 2024’, sent to THE WHISTLER.

“The continuous rise in debt from issuances of debt instruments without a commensurate rise in revenue-generating investments may crowd out private investment and worsen the country’s debt profile in the long-term,” the report said.

Nigeria’s public debt grew by 144.1 per cent to N121.67tn in Q1 2024 from N49.85tn in Q1 2023 due to naira devaluation, additional debts and the securitisation of ways and means.

According to PWC, N4.9tn of the N7tn approved for the securitisation of ways and means as well as N4.5tn debt to fund the 2024 budget deficit was raised by the DMO as of May 2024.

PWC said, “The fiscal deficit to GDP of 6.1 per cent recorded in 2023 remains above the Fiscal Responsibility Act (FRA) threshold of 3 per cent consequently
leading to a high debt profile.

“Fiscal sustainability concerns may remain slightly elevated, given debt servicing costs (89 per cent of the budgeted fiscal deficit is to be financed by new borrowings).”

According to PWC, the federal government must drive fiscal prudence by optimising spending on capital projects with the highest Return on Investment (ROI).

The government must also “Rationalise public service spending and improve revenue diversification and collection efficiency.”