The World Bank’s recently released Macro Poverty Outlook for Nigeria has highlighted the nation’s constant fiscal deficit as a major contributor to its public debt stock.
The report revealed that in 2022, 96.3% of the government’s revenue was spent on servicing debt. This was compounded by low non-oil revenues and high-interest payments, which created significant fiscal pressure.
As a result, Nigeria’s public debt stock exceeded 38% of GDP, with the debt service to revenue ratio rising from 83.2% in 2021 to 96.3% in 2022.
The bank also identified the redesign of the naira by the Central Bank of Nigeria (CBN) as a contributing factor to the country’s economic growth and poverty reduction challenges. It projected that about 13 million Nigerians would fall below the national poverty line between 2019 and 2025.
The report further noted that Nigeria’s economic environment had deteriorated, leading to millions of Nigerians living in poverty.
The decline in macroeconomic stability was attributed to the monetization of the fiscal deficit, declining oil production, exchange rate distortions, and costly fuel subsidies.
The World Bank called for macro-fiscal reforms to address Nigeria’s persistently high inflation, declining forex reserves, and rising fiscal pressures.
It also recommended the implementation of structural economic changes to promote private investment, efficient public spending, and social development outcomes to boost productivity.
The report emphasized that Nigeria’s population growth continued to outpace poverty reduction, leading to more people falling below the poverty line.
Therefore, the World Bank urged the Nigerian government to take immediate action to implement reforms that would promote economic growth, reduce poverty, and improve the welfare of its citizens.
