Nigeria is facing a looming debt crisis as its public debt stock is set to reach N130tn this year, raising concerns about the country’s debt-to-GDP ratio. The report by Afrinvest, titled ‘Bank Recapitalisation, Catalyst for a $1tn Economy,’ disclosed this worrying trend. In the first quarter of 2024, Nigeria’s public debt stood at N121.7tn, with 63.6% in domestic debt and 36.4% in external debt. The report also highlighted the risks associated with the government’s borrowing plan and budget assumptions.
Despite some positive moves by the Central Bank of Nigeria to address forex market challenges, Afrinvest warned that the country needs to explore alternative sources of foreign exchange. The report recommended options like bilateral loans, debt-for-nature swaps, and asset concessions to alleviate the forex crisis. Sustainable fiscal policies are crucial to revitalize traditional forex inflow sources like oil production and foreign investment.
It’s clear that Nigeria is at a critical juncture regarding its debt management and forex challenges. Bold and strategic actions are needed to avoid a full-blown economic crisis.
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