MON 11 JAN, 2021-theGBJournal-Faced with the ravaging impact of COVID-19 on oil and non-oil revenue, the government has continued to grapple with a rising fiscal deficit in the face of increasing expenditure to limit the impact of the pandemic on the economy.
Based on the latest data released by the Debt Management Office (DMO), Nigeria’s public debt stock grew by 3.91% q/q (+NGN1.21 trillion) to NGN32.22 trillion in Q3-20. This was 13.2% below our estimate of NGN32.71 trillion.
Aside from the need to meet revenue shortfalls and respond to the COVID-19 pandemic, we note that the issuance of Promissory Notes by the FGN has also contributed to the growth in the public debt stock.
We estimate that public debt stock would have increased by 2.6% q/q to c. NGN33.05 trillion as at the end of Q4-20 as the FGN and State Governments continued to prioritize spending amid the revenue shortfall.
Considering that revenues are still reeling from the impact of the pandemic, we think there is the urgent need for government to implement fiscal consolidation measures to avoid further build-up of debt that will weaken debt sustainability metrics. Analysis provided by Cordros Research