World Bank alarmed as Nigeria’s revenue has little left for investment
By Jeph Ajobaju, Chief Copy Editor
Nigeria’s fiscal deficit has grown its public debt, as 96.3 per cent of revenue was spent on debt servicing in 2022.
“The fiscal position deteriorated. In 2022, the cost of the petrol subsidy increased from 0.7 per cent to 2.3 per cent [of] GDP. Low non-oil revenues and high-interest payments compounded fiscal pressures,” the World Bank said in its ‘Macro Poverty Outlook for Nigeria: April 2023.’
“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.”
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Fallout of naira scarcity
The bank reiterated the cash scarcity created by the naira redesign policy of the Central Bank of Nigeria (CBN) hampered economic growth and poverty reduction efforts, noting about 13 million Nigerians would become poor between 2019 and 2025, per reporting by The PUNCH.
“Nigeria is in a more fragile position than before the late 2021 global oil price boom. Growth and poverty reduction have further been affected by cash scarcity in the context of the Naira redesign.
“The economy is projected to grow by an average of 2.9 per cent per year between 2023 and 2025, only slightly above the population growth rate of 2.4 per cent. Growth will be driven by services, trade, and manufacturing. Oil production is projected to remain subdued in part because of inefficiencies and insecurity.
“With Nigeria’s population growth continuing to outpace poverty reduction and persistently high inflation, the number of Nigerians living below the national poverty line will rise by 13 million between 2019 and 2025 in the baseline projection.”