The World Bank has projected that the Federal Government of Nigeria would be spending 123.4 percent of its revenue in 2023 on debt servicing.
This was contained in a document titled ‘Nigeria Public Finance Review: Fiscal Adjustment for Better and Sustainable Development Results’ and presented by the new World Bank Lead Economist for Nigeria, Alex Sienaert, in November 2022.
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The document projected that debt servicing would gulp 100.2 percent of Federal Government revenue by the end of 2022.
This was a decline from the earlier projection in its October Africa’s Pulse report, which is a biannual analysis of the near-term macroeconomic outlook for the region, published during the World Bank/IMF Spring and Annual Meetings in April and October.
In Africa’s Pulse report, the Washington-based bank said that Nigeria’s debt service to revenue ratio could stand at 102.3 percent by the end of 2022. It described the public debt in Nigeria as concerning due to the rising debt service-to-revenue ratio.
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However, the situation would be dire in 2023 as debt surviving would exceed 118 percent of revenue reported in the first four months of 2022.
In his presentation document, the World Bank’s lead economist for Nigeria noted that borrowing more money was not the solution for Nigeria.
“Borrowing more is not the solution: debt costs are rising rapidly, squeezing non-interest spending.
“Debt servicing has surged over the past decade and is expected to continue increasing over the medium-term, crowding out productive spending,” the document read.