Nigeria’s public debt is set to reach 40% of Gross Domestic Product (GDP) by 2024 on fresh borrowing, the African Development Bank (AfDB) stated in its latest report.
This was revealed in the bank’s African Economic Outlook 2022, which was released at the Bank’s Annual General Meeting (AGM) held in Accra, Ghana.
In the report obtained by Investors King, the multilateral financial institution projected that Nigeria’s economy would grow by 3.4% in 2022 and 3% in 2023. This, the financial institution attributed to high oil prices, a recovery in the service and manufacturing sectors, and government policy to drive growth in the agricultural sector.
However, it cautions that higher oil prices may be offset by production limits caused by technological problems and insecurity in oil-producing countries.
In part, the report reads, “Nigeria’s growth was led largely by services, partly offsetting the contraction in oil output.
“Growth will decelerate, averaging 3.2% during 2022–23, due to persistently low oil production and rising insecurity. Inflation is projected to remain elevated at 16.9% in 2022 and stay above pre-pandemic levels in 2023, fueled mainly by rising food, diesel, and gas prices and persistent supply disruptions amplified by the Russia–Ukraine conflict.
“Capital inflows are projected to recover, while oil exports are projected to increase slightly. The benefit of a forecast positive oil price shock on exports may, however, be partly offset by a weak output effect due to lower oil production, stoked by infrastructure deficiencies and rising insecurity.
“The projected marginal current account surplus of 0.1% of GDP in 2022 could turn into a deficit of 0.2% in 2023. Improved revenue collection will help narrow the fiscal deficit to an average of 4.5% of GDP. Public debt is targeted to reach 40% of GDP by 2024 on fresh borrowing.
“The headwinds to the outlook may be exacerbated by rising insecurity and policy uncertainty underpinned by reversal of initially planned removal of subsidies on premium motor spirit a year before the 2023 elections.”