BY FESTUS OKOROMADU
The World Bank has warned of an impending economic crisis in Nigeria as the country spent 96.3 percent of her revenue in 2022 on debt servicing.
The Bank declared this in its macro poverty outlook report for Nigeria in April.
The report also showed that Nigeria’s fiscal position deteriorated in 2022, leaving the cost of the petrol subsidy to increase from 0.7 percent to 2.3 percent of gross domestic product.
“This has kept the public debt stock at over 38 percent of GDP and pushed the debt service to revenue ratio from 83.2 percent in 2021 to 96.3 percent in 2022.
“The fiscal deficit was estimated at 5.0 percent of GDP in 2022, breaching the stipulated limit for a federal fiscal deficit of 3 percent,” it said.
The World Bank noted that the change brought about weakened macroeconomic stability amidst declining oil production, costly fuel subsidies, exchange rate distortions, and monetisation of the fiscal deficit.
“In 2022, oil revenues, the fiscal deficit outturn, FX reserves, and economic growth decoupled from the cycle of higher global oil prices. GDP growth decelerated from 3.6 percent in 2021 to 3.3 percent in 2022.
“Growth was driven by manufacturing, construction, and most services. In contrast, the oil sector shrank by 19.2 percent. From the demand side, growth was driven by private consumption and investment,” the report noted.
It also revealed that the deteriorating economic environment was leaving millions of Nigerians in poverty, resulting in risks tilting to the downside, given the lack of macro-fiscal reforms, the naira demonetisation, and an uncertain external outlook.