Analysts at Cowry Asset Management Limited have raised fresh concerns over Nigeria’s capacity to service its rising external debt stock. The analysts, who stated this in the firm’s “Cowry Weekly Financial Markets Review and Outlook,” obtained by New Telegraph yesterday, said that given the rapid pace at which Nigeria was amassing debt without a corresponding healthy growth in revenue, the country might face serious challenges servicing its foreign debt especially since it continues to be heavily dependent on revenue from crude oil.
The analysts’ comments followed last week’s release by the Debt Management Office (DMO) of total debt figure for the country as at June 2020, which showed that Nigeria’s total public debt stock for the second quarter of 2020 increased by 8.31per cent to N31.01 trillion as at June 2020 (from N28.63 trillion as at March 2020). Significantly, the increase in the total debt stock was mainly due to a rise in the country’s external debt stock by 13.78per cent to N11.36 trillion (or $31.48 billion at N361.00/$1) as at June 2020 from N9.99 trillion (or $27.67 billion at N361.00/$1) in March 2020. Nigeria had received additional $3.36 billion worth of loan from International Monetary Fund (IMF) in Q2’ 2020 as emergency support to tackle the impact of the coronavirus(Covid-19) pandemic.
The analysts said: “What bothers the mind the most about Nigeria’s rising debt stock is the disparity between the country’s poor infrastructural state and the jump in debt stock within the last five years. Total national debt stock ballooned by 155.85 per cent to N31.01 trillion in June 2020, down from N12.12 trillion in June 2015 – adding a whopping sum of N18.89 trillion.