September 29, 2024

The Monthly Report of the Organisation of Petroluem Exporting Countries OPEC Says Nigeria’s public debt increased by around 15% year on year(y-o-y) by the end of March to US$79.3bn.

The increase is driven by growth in both domestic and foreign borrowing due to a shortage, caused by a decline in internal revenues.

Nigeria’s GDP grew by 1.9% y-o-y in first quarter of 2020 following 2.6% growth in 4Q 19, marking the slowest pace of economic growth since 3Q 18.

The available data also reflected early COVID-19 disruptions, which led to restrictions in Nigeria’s activities with its main trading partners.

The non-oil sector grew by only 1.5% compared with 2.3% in 4Q 2019.

Meanwhile, internal trade declined to -2.8% following a contraction of only -0.5% in 4Q19.

Public administration contracted by -8.7% in 1Q20, while administrative and support services contracted by -1.9% following expansion of 1.3% in 4Q19.

Nigeria’s manufacturing sector expanded only by 0.4% compared with 1.3% in 4Q19, and agriculture grew by 2.2% following growth of 2.3% in 4Q19. Most importantly, the oil sector advanced by only 5.1% following 6.4% growth in 2019.

The recent manufacturing purchasing managers’ index, PMI reading indicated the steepest contraction in Nigeria’s manufacturing activity since July 2014, as it fell to 41.1 in June from 42.4 the previous month. In the meantime, responding to the recent crash in oil prices and the economic fallout of COVID-19, Nigeria’s central bank devalued the local currency as it adjusted the official peg against the dollar to 360 from 307 in March. The step was taken to converge a multiple exchange rate regime which it has used to manage pressure on the naira.

Nigeria’s debt-to-GDP ratio, is moderate by international standards at about 20%, meanwhile the federal government’s debt service-to-revenue ratio is high due to low tax revenue. As a result, debt servicing might limit the government’s ability to increase economic productivity, and the fiscal account may remain in deficit throughout the medium term…

36 thoughts on “OPEC Report Decries Nigeria’s Growing Debt at US$79.3Bn in March.

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