Nigeria’s debt burden is projected to hit N19.3 trillion by December of 2017, according to economy analysts who have also warned that the country might be heading for another debt trap.
The federal and state government’s reliance on debt instruments for financing projects across Nigeria is gradually bloating the debt profile of the states, which may hit the N19 trillion mark by the fourth quarter of 2017.
According to a recent report in The PUNCH newspaper, which was based on the Ministry of Budget and National Planning’s figures, Nigeria’s debt profile is expected to increase by N6.72 trillion in 2017, which will bring the total to N19.3 trillion when added to the N12.58 trillion that was recorded in 2016.
Nigeria’s domestic debt profile is projected to increase by N2.34 trillion from N10.09 trillion (2016) to N12.43 trillion (2017).
Foreign debt, on the other hand, is also expected to surge by N2.48 trillion to N6.86 trillion (from N4.38 trillion).
The Federal Government has applied for a $29.96 billion loan from the World Bank, African Development Bank, and Japan International Cooperation Agency, which it intends to use in funding the Mambila Hydroelectric Power project, expected to gulp about $4.8 billion; the railway modernisation project in Calabar, Port Harcourt, and Onne Deep Seaport segment, projected to cost about $3.5 billion; the Abuja Mass Rail Transit project (phase two), expected to cost $1.3 billion, and the Lagos-Kano Railway modernisation project (Lagos-Ibadan segment), expected to cost about $1.3 billion.
Other projects factored into the loan requirement include: the Lagos-Kano Railway modernisation project (Kano-Kaduna segment, double track), to cost $1.1 billion; Eurobond, $4.5 billion; Federal Government Budget Support, $3.5 billion; Social (education and health), $2.2 billion; agriculture, $1.2 billion; economic and management statistics, $200 million.
The Ministry of Budget and National Planning said that the shift towards more foreign borrowing instead of domestic loans is due to the lower cost of borrowing associated with foreign loans.