The World Bank has said that public debt in Nigeria is concerning due to the rising debt service-to-revenue ratio.
According to the bank, the debt service to revenue ratio could stand at 102.3 per cent by the end of 2022.
The Washington-based bank said this in its latest Africa’s Pulse report, which is a biannual analysis of the near-term macroeconomic outlook for the region, published around the World Bank/IMF Spring and Annual meetings each April and October.
The report read in part, “Albeit at a low level (37.6 per cent), public debt in Nigeria is a concern as the country recorded a high debt service-to-revenue ratio (118.9 per cent) between January and April.
“Debt pressures have increased as debt service to revenue is projected to increase to 102.3 percent by end 2022.
“This suggests that high oil prices do not translate into government receipts due to elevated subsidies for petroleum products. The combination of low production in the oil industry and unsustainable subsidies is one of the main obstacles to attaining debt sustainability.”
The bank further said that a number of countries were either in or at high risk of debt distress due to the removal of the Debt Service Suspension initiative.
It further noted that oil-exporting countries were expected to reduce government debt significantly, except Nigeria.
The bank added that economic growth was subdued in Nigeria, with annual growth slowing from 3.6 per cent in the first quarter of 2022 to 3.4 per cent in the second quarter.
According to the bank, the growth was affected by the underperformance of the oil sector.