World Bank Releases Report on Nigerian Economy as FG Spends N96 Out of Every N100 of Its Revenue to Repay Debt

World Bank Releases Report on Nigerian Economy as FG Spends N96 Out of Every N100 of Its Revenue to Repay Debt

  • World Bank has provided a detailed analysis of Nigeria's economy from debt to poverty and currency challenges
  • The major concern is how the federal government spends N96 out of every revenue from tax and oil to repay debt
  • This is a cause for concern as it limits the country's ability to invest in critical sectors such as health, education, and infrastructure

PAY ATTENTION: Сheck out news that is picked exactly for YOU ➡️ click on “Recommended for you” and enjoy!

World Bank has revealed that Nigeria spends 96.3 percent of government revenue on servicing debt in 2022.

This means that for every N96 out of every N100 of its revenue to service its debt.

The global financial institutions stated this Macro Poverty Outlook for Nigeria: April 2023 brief released on Friday, April 13, 2023.

World bank of Nigeria
World Bank expresses concern about Nigeria's economic health Photo credit: @worldbank
Source: Getty Images

The report also highlighted that the fiscal deficit breached the stipulated limit for the federal fiscal deficit, Punch reports.

Read also

Emefiele happy with IMF growth projections for Nigeria, says CBN vindicated

PAY ATTENTION: Follow us on Instagram - get the most important news directly in your favourite app!

Part of the report reads:

"The fiscal position deteriorated. In 2022, the cost of the petrol subsidy increased from 0.7 per cent to 2.3 per cent GDP.
"Low non-oil revenues and high-interest payments compounded fiscal pressures. The fiscal deficit was estimated at 5.0 per cent of GDP in 2022, breaching the stipulated limit for federal fiscal deficit of 3 per cent.
"This has kept the public debt stock at over 38 per cent of GDP and pushed the debt service to revenue ratio from 83.2 per cent in 2021 to 96.3 per cent in 2022.”

World Bank speaks on CBN cash policy

Also in the brief, World Bank revealed that the cash scarcity created by the CBN’s naira redesign policy hampered the country’s economic growth and poverty reduction efforts.

Read also

FG to Pay $23.3 million for consultancy fee on $800 million World Bank Loan for subsidy relief, CBN reacts

It also projected that about 13 million Nigerians would become poor between 2019 and 2025.

It noted:

"Nigeria's economic situation has worsened since the late 2021 global oil price boom, making it more fragile. The shortage of cash in the context of the Naira redesign has further impacted growth and poverty reduction.
"The economy is expected to experience a modest growth rate of 2.9% annually from 2023 to 2025, which is only slightly higher than the population growth rate of 2.4%.
"The growth will be mainly driven by the service, trade, and manufacturing sectors. However, the production of oil is likely to remain low due to insecurity and inefficiencies.
“In the baseline projection, due to Nigeria's population growth exceeding poverty reduction efforts and high inflation rates, the number of Nigerians living below the national poverty line is expected to increase by 13 million between 2019 and 2025.”

World Bank also highlighted additional economic concerns

Read also

China's economy expected to rebound as zero-Covid era fades

World Bank also touched on the issues around oil revenue and how Nigeria failed to capitalize on opportunities.

The bank also further noted that macroeconomic stability has weakened considerably due to multiple FX rates, high and increasing inflation, rising fiscal pressures, and declining forex reserves.

Nigeria repays China, Islamic bank, others N3.63tn debt

Meanwhile, in another report, Legit.ng revealed that Nigeria has successfully repaid part of its debt to countries and institutions.

The report provided a breakdown of how the money was paid to China and Islamic banks, among others.

Although the repayment is good news, the Nigerian government has borrowed another N6.69 trillion.

Source: Legit.ng

Dave Ibemere avatar

Dave Ibemere (Senior Business Editor) Dave Ibemere is a senior business editor at Legit.ng. He is a financial journalist with over a decade of experience in print and online media. He also holds a Master's degree from the University of Lagos. He is a member of the African Academy for Open-Source Investigation (AAOSI), the Nigerian Institute of Public Relations and other media think tank groups. He previously worked with The Guardian, BusinessDay, and headed the business desk at Ripples Nigeria. Email: dave.ibemere@corp.legit.ng.

Online view pixel