BANK RECAPITALISATION, CATALYST FOR A $1TN ECONOMY- AFRINVEST
Key Findings:
1. Projected Debt Stock:
- Nigeria’s public debt stock is anticipated to reach ₦130 trillion by December 2024.
2. Current Debt Statistics (Q1 2024):
- Total Public Debt Stock: ₦121.67 trillion
- Domestic Debt: ₦77.5 trillion (63.6%)
- Federal Government Bonds: ₦44.8 trillion
- Treasury Bills: ₦20.3 trillion
- Other Domestic Debt: ₦12.4 trillion
- External Debt: ₦44.2 trillion (36.4%)
- Multilateral Creditors: ₦14.3 trillion
- Bilateral Creditors: ₦10.9 trillion
- Commercial Creditors: ₦19.0 trillion
3. Growth and Projections:
- Quarter-on-Quarter Growth (Q4 2023 to Q1 2024): 24.99%
- Fiscal Deficit, Debt-to-GDP, Debt Servicing-to-Revenue Estimates by Year-End:
- Fiscal Deficit: Over ₦13.0 trillion
- Total Debt Stock: ₦130 trillion
- Debt-to-GDP Ratio: 55%
- Debt Servicing-to-Revenue Ratio: 60%
4. Budget Performance:
- 2023 Actual Revenue: ₦11.9 trillion (7.6% above budgeted amount)
- Aggregate Expenditure: ₦18.8 trillion (31.8% increase)
- Deficit: ₦46.9 trillion
- Federal Government Debt Share: 89.7% of total public debt stock
5. Impact on Financial Sector:
- Expansive borrowing could negatively affect banks’ deposits due to higher yields on risk-free government securities.
- Potential for increased asset deterioration in banks due to budgetary patterns.
6. Central Bank of Nigeria (CBN) Actions:
- Streamlining of Bureau De Change operators and consolidation of forex segments.
- Resumption of periodic forex sales at discounted rates.
- Enhanced supervision of BDCs, leading to improved compliance.
7. Recommendations:
- Forex Market Stability: Explore alternative forex sources such as bilateral loans, natural resource-tied loans, debt-for-nature swaps, and asset concessions.
- Revitalization of Traditional Forex Inflows: Oil production, remittances, and foreign portfolio investments should be supported by effective fiscal policies.
Related Concerns:
- Debt Increase: 360% rise in public debt noted as concerning.
- Legislative Action: Moves to criminalize excessive public debt.
Key Findings:
1. Projected Debt Stock:
- Nigeria’s public debt stock is anticipated to reach ₦130 trillion by December 2024.
2. Current Debt Statistics (Q1 2024):
- Total Public Debt Stock: ₦121.67 trillion
- Domestic Debt: ₦77.5 trillion (63.6%)
- Federal Government Bonds: ₦44.8 trillion
- Treasury Bills: ₦20.3 trillion
- Other Domestic Debt: ₦12.4 trillion
- External Debt: ₦44.2 trillion (36.4%)
- Multilateral Creditors: ₦14.3 trillion
- Bilateral Creditors: ₦10.9 trillion
- Commercial Creditors: ₦19.0 trillion
3. Growth and Projections:
- Quarter-on-Quarter Growth (Q4 2023 to Q1 2024): 24.99%
- Fiscal Deficit, Debt-to-GDP, Debt Servicing-to-Revenue Estimates by Year-End:
- Fiscal Deficit: Over ₦13.0 trillion
- Total Debt Stock: ₦130 trillion
- Debt-to-GDP Ratio: 55%
- Debt Servicing-to-Revenue Ratio: 60%
4. Budget Performance:
- 2023 Actual Revenue: ₦11.9 trillion (7.6% above budgeted amount)
- Aggregate Expenditure: ₦18.8 trillion (31.8% increase)
- Deficit: ₦46.9 trillion
- Federal Government Debt Share: 89.7% of total public debt stock
5. Impact on Financial Sector:
- Expansive borrowing could negatively affect banks’ deposits due to higher yields on risk-free government securities.
- Potential for increased asset deterioration in banks due to budgetary patterns.
6. Central Bank of Nigeria (CBN) Actions:
- Streamlining of Bureau De Change operators and consolidation of forex segments.
- Resumption of periodic forex sales at discounted rates.
- Enhanced supervision of BDCs, leading to improved compliance.
7. Recommendations:
- Forex Market Stability: Explore alternative forex sources such as bilateral loans, natural resource-tied loans, debt-for-nature swaps, and asset concessions.
- Revitalization of Traditional Forex Inflows: Oil production, remittances, and foreign portfolio investments should be supported by effective fiscal policies.
Related Concerns:
- Debt Increase: 360% rise in public debt noted as concerning.
- Legislative Action: Moves to criminalize excessive public debt.