The World Bank Group said public debt in Nigeria and other low- and middle-income countries is now at its highest level in 50 years, equivalent to more than 200% of government revenue.
In a new report titled “Raising the Bar on Debt Transparency,” the Washington-based bank said that with the pandemic-induced economic slowdown, the impact of war in Ukraine and rising interest rates, many countries faced serious challenges in servicing their debts.
The report said in particular: “Total public debt has reached an alarming level for 50 years in low- and middle-income economies, equivalent to more than 200% of public revenue”.
According to the World Bank’s recent International Debt Statistics 2022 report, as a result of COVID-19, the external debt burden of low-income countries around the world has increased by 12% to a record high of 860 billion in 2020, the fastest accumulation since the World War. II.
According to the report, despite the unprecedented debt burden many governments were facing, the true extent of their public debt was often difficult to quantify. In fact, many low- and middle-income countries fail to disclose timely debt data or sometimes publish incomplete data that underestimates the true level of liabilities, the report further states.
Global surveillance was also hampered by the opacity of several domestic debt markets, the increased use of central bank repurchase agreements or currency swaps that were not included in debt statistics. and a proliferation of borrowing by public and private sector entities with explicit or implicit commitments. government guarantee, he noted.
The report further states that debt transparency is key to achieving sustainable financing and macro-financial stability. This would facilitate new high-quality investments, reduce corruption and instill accountability, he noted.
The report stressed that comprehensive debt data would strengthen the international community’s ability to help prevent debt crises or assist countries when they occur.
“’Raising the Bar for Debt Data Transparency’ was the subject of a recent roundtable, co-hosted by the World Bank Group’s Chief Economist and the Executive Director for Japan at the World Bank. The event brought together a panel of experts from borrowing and creditor countries, academia and the World Bank, who discussed ongoing efforts and concrete actions to support debt data transparency,” he said. -he declares.
An economics professor at Olabisi Onabanjo University, Sheriffdeen Tella, in an exclusive chat with our correspondent, said the government’s penchant for making poor economic decisions has led to Nigeria’s current debt problems.
“We talked about it all the time. We said we should slow down these debts, but the government doesn’t seem to care. They look at the debt-to-GDP ratio. This is not appropriate because even the GDP we are talking about, are we sure of the figure? What we should be looking at is not the debt-to-GDP ratio, but income.
He advised the government to explore better ways to generate revenue, as continued reliance on taxation was not the solution to address the situation.
Speaking in an exclusive interview with our correspondent, the Vice President of the Lagos Chamber of Commerce and Industry, Dr Gabriel Idahosa, said the new administration would inherit “a very difficult situation”.
He said: “Essentially our debt service is almost equal to our income. At one point it was about 96%. 100 of our income. So really, we are borrowing to finance the government. Almost all of our income goes to servicing debts. This is what the numbers look like right now. At the beginning of the year, it was estimated that approximately 80% of our income would go to servicing the debt.
“If you look at the income generated and the debt service, they are almost equal. This means that everything we generate is actually used to service debts. This is the situation we find ourselves in and it will unfortunately continue because the fuel subsidy estimate of N4trn this year, with the continued rise in the price of crude oil, the fuel subsidy could take up to N6trn .