The International Monetary Fund (IMF), has projected that Nigeria’s federal government could spend as much as 92.6 per cent of its revenue on debt servicing in 2022.
The global financial institution which stated this in its 2021 Article IV, which was released on Monday, also estimated last year’s debt servicing-to-revenue ratio at 85.5 per cent.
As at the end of September, 2021, debt-servicing-to-revenue ratio stood at 76 per cent, implying that N76 out of every N100 earned by the government was spent on payment of interest on debts.
IMF’s latest statement estimates the debt-servicing-to-consolidated revenue (total revenues of the government and its agencies) for 2021 and 2022 at 29 and 32.8 per cent respectively.
It also projects the public debt to grow by 117.8 per cent on a year-on-year basis in 2022, just as inflation is to grow at an average rate of 14.3 per cent. Headline inflation rate closed last year at 15.63 per cent.
The Fund expects the country’s revenues and grants in the year to cap at seven per cent of total output. Last year’s rate was estimated at 7.4 per cent, which is much higher than 6.3 per cent achieved in 2020.
The report said the country’s “economy is recovering from a historic downturn benefitting from government policy support, rising oil prices and international financial assistance.”
It pointed out that insecurity and poor COVID-19 vaccination were major factors challenging the country’s economic growth, stressing that “worsening violence and insecurity could also derail the recovery.”