Tony Chukwunyem 
As reactions continue to trail last week’s announcement by the Debt Management Office (DMO) that Nigeria’s debt hit N38.0trillion as at September 2021, up 15 per cent from N32.9trillion in 2020, analysts at FBNQuest Research have predicted that the country’s debt service to revenue ratio this year could surpass 2020’s 72 per cent.
In a report obtained by New Telegraph yesterday, the analysts, who noted that the Federal Government has barely been able to achieve 60 per cent of its annual revenue collection targets in the past five years, also said they expected fiscal deficit to Gross Domestic Product (GDP) this year to rise higher than the four recorded in 2020. As the analysts put it, “according to the Fiscal Responsibility Act, the fiscal deficit as a proportion of GDP should not exceed 3%. However, Nigeria since 2017, has consistently breached this benchmark with the fiscal deficit on the rise.
In 2020, fiscal deficit to GDP hit four per cent and is on track to rise even higher in 2021. “In the past five years, realised federal revenues have barely hit 60 per cent of annual targets. With debt on the rise and relatively weak revenues, debt sustainability is now more concerning. According to the budget office data, Nigeria’s debt service to revenue reached 72 per cent in 2020, and based on the current trajectory, it could surpass 2020 levels this year. Therefore, reforms and diversification of the government’s revenue base are necessary for immediate fiscal improvements.”
New Telegraph reports that the Institute of Chartered Accountants of Nigeria (ICAN) in June raised concerns over Nigeria’s rising debt burden. The President of ICAN, Mrs. Comfort Eyitayo, who stated this while speaking at her inauguration as the 57th President of the Institute in Lagos, said that as financial experts, chartered accountants in the country would lend their voices to the calls by patriotic Nigerians that the trend towards borrowing to finance consumption should be discouraged notwithstanding that the debt to GDP ratio is within acceptable fiscal and economic limits. She said: “In any case, what does the GDP means to the common man when inflation is over 18 per cent and he cannot afford three square meals? For the nation to survive economically, it cannot continue to spend over 70 per cent of its revenue on debt servicing.
