…As States debt profiles become mind-boggling
Latest World Bank and International Monetary Fund (IMF) ranking on Africa’s fastest growing economies 2018 has shown that Nigeria has left top ten contenders to hide at number 41.
This is as Anambra State has remained the state with the lowest level of domestic debt at N2.6bn leaving Lagos with mind-boggling debts of N363bn according to the Debt Management Office (DMO) at the Presidency.
Business Hilights recalls that Nigeria was at number one in 2012, 2013, and 2014.
It dropped slightly to third in 2015 but now ran to 41st in Africa and 88th Fastest growing Economy in the World.
Top 10 Fastest Growing Economies in Africa in 2018 (World Bank, IMF….)
[1] Ghana >>>>>>8.3%
[2] Ethiopia >>>>>8.2%
[3] Cote d’Ivoire>>7.2%
[4] Djibouti >>>>> 7.0%
[5] Senegal >>>>>6.9%
[6] Tanzania >>>> 6.8%
[7] Sierra Leone>>6.3%
[8] Burkina Faso>6.0%
[8] Benin Rep>>>>6.0%
[9] Rwanda>>>>>>5.9%
[10] Niger Rep>>>5.2%
——————
[41] NIGERIA>>>>1.9%,
Only recently, the IMF reiterated the need for Nigeria to give top priority to structural reforms and growth friendly fiscal consolidation based on non-oil revenue mobilization. The government was tasked to increase the fiscal space while scaling up priority expenditures and reducing FG interest to revenue ratio to about 30%. We note that the government’s shift to external borrowing is aimed at addressing the high cost servicing debt in the domestic markets, however the growth in the non-oil sector, and thus revenues, are likely to continue to be plagued by weak consumer demand, infrastructural deficit, and insecurity.
However, according the Fiscal Strategy Paper of the Federal Government, the FG plans to spend a total of NGN8.9 trillion in the 2019 fiscal period. This figure is a 3.4% increment over the initial estimates for the 2018 budget and is 2.4% lower than the approved 2018 budget. The revenue and deficit projections for 2019 are NGN6.32 trillion and NGN2.59 trillion respectively. The oil revenue assumptions are: oil price benchmark of USD50/barrel and daily production output of 2.4mb/d. With oil prices significantly above the benchmark and stable oil production, oil revenue projection is likely to be exceeded. We note, however, expected borrowing to fund the wider fiscal deficit (+36.3%) raises further concerns over debt sustainability.
The National Bureau of Statistics (NBS) had Friday, revealed that Nigeria’s foreign debt at the end of the first half of 2018 (H1’18) stood at $22.08 billion. This represents a 17 percent rise over the $18.9 billion recorded at the end of 2017.
The breakdown, according to NBS foreign and domestic debt report for second quarter 2018 (Q2’18), shows that foreign borrowings amounting to $10.88 billion were from multilateral agencies, $274.98 million from bilateral (AFD) and another $2.12 billion bilateral from the Exim Bank of China, JICA, India and KFW, while $8.80 billion was commercial debt.
The report also shows that Lagos State has the highest foreign debt profile among the thirty-six states and the FCT accounting for 34.17 percent while Edo (6.57 percent) and Kaduna (5.48 percent) were on the top three most indebted states. Recall that the Debt Management Office (DMO), last week, disclosed that the domestic debt stock of the country’s 36 states and the Federal Capital Territory (FCT) stood at N3.5 trillion as at the first half of 2018 (H1’18), which was 6 percent over the N3.3 trillion recorded at the end of December 2017. Lagos State recorded the highest domestic debt stock at N517 billion or 17 percent of the total debt stock of states, followed by Delta (N223 billion), Rivers (N191 billion), Akwa Ibom (N179 billion), and Osun (N136 billion), making up the top five indebted states.
