The latest data from the Debt Management Office (DMO) reveals a startling truth: Nigeria’s external debt has skyrocketed to an alarming $42 billion as of June 2024. This staggering figure is a direct result of the Federal Government’s (FG) reckless borrowing spree, which threatens to plunge the nation into economic chaos. The implications are far-reaching, and the consequences will be dire if urgent action is not taken.
FG’s Debt Burden: $38 Billion and Counting
The federal government’s debt accounts for a whopping $38 billion of the total external debt, with multilateral debt standing at $17.13 billion and bilateral debt, including loans from China EXIM Bank, Jika, KWF, IsDB, and AFD, reaching $5.49 billion. Commercial Eurobonds and diaspora bonds add another $15.12 billion to the tally. This alarming debt accumulation has raised concerns among experts, who warn of an impending fiscal crisis.
States Shoulder the Weight
Meanwhile, the 36 states and Federal Capital Territory are struggling under the weight of $4.89 billion in external debt. Lagos State leads the pack with a staggering $1.2 billion, followed closely by Kaduna State with $640.99 million. The states’ external debt burden is compounded by their domestic debt, which has ballooned to N4.27 trillion.
Domestic Debt Disaster
The situation is equally dire on the domestic front, with Nigeria’s total domestic debt surging to N4.27 trillion. Lagos State again tops the list with N885.99 billion, while Rivers and Delta States follow with N389.2 billion and N304.54 billion, respectively. This unsustainable debt level threatens the economic stability of the states and the nation as a whole.
Experts warn that Nigeria’s ballooning debt poses significant risks to economic stability and sustainability. The FG’s failure to address the issue will have far-reaching consequences, including:
1. Fiscal Crisis: Nigeria’s debt service costs will continue to escalate, diverting resources from essential public services.
2. Economic Instability: The nation’s economic growth will be stifled, and inflation will soar.
3. Reduced Credit Rating: Nigeria’s credit rating will plummet, making future borrowing more expensive.
4. Increased Poverty: The debt burden will exacerbate poverty and inequality, undermining the government’s efforts to promote economic development.
5. Decreased Investor Confidence: The nation’s precarious debt situation will deter investors, hindering economic growth and development.
States with the Highest External Debt
1. Lagos: $1.2 billion
2. Kaduna: $640.99 million
3. Edo: $380.97 million
States with the Highest Domestic Debt
1. Lagos: N885.99 billion
2. Rivers: N389.2 billion
3. Delta: N304.54 billion
Despite the alarming debt figures, the FG remains inactive, failing to implement effective debt management strategies. The recent allocation of N4.83 trillion from Nigerian Treasury Bills (NTBs) and Bonds to settle domestic debts is merely a band-aid solution. The FG’s lack of urgency and transparency has raised concerns among Nigerians, who demand accountability and action.
Nigerians demand accountability and transparency from their government. The FG must:
1. Implement Debt Reduction Strategies: Prioritize debt repayment and reduction.
2. Enhance Revenue Generation: Diversify revenue streams to reduce dependence on borrowing.
3. Promote Fiscal Discipline: Ensure responsible spending and budgeting practices.
4. Increase Transparency: Provide regular updates on debt accumulation and management.
5. Engage Stakeholders: Collaborate with experts, civil society, and the private sector to address the debt crisis.
Nigeria’s debt bomb is ticking, and the consequences of inaction will be catastrophic. The FG must take immediate action to address the debt crisis, promote fiscal discipline, and ensure economic sustainability. The nation’s future depends on it.
Nigeria’s debt crisis demands urgent attention. The FG must act now to prevent economic catastrophe. The nation’s future hangs in the balance.
