Moody’s downgrades Nigeria over huge debt

Moody’s Investors Service, has attributed its downgrade of the country’s rating to negative from stable as a result of the nation’s bloating debt profile.

According to the rating agency, the increasing fragility of Nigeria’s public finances is evident in the greater reliance by the government on financing from the Central Bank of Nigeria (CBN) over the last three years. It added that the government is dependent on oil export proceeds to cover persistently large fiscal deficits, with CBN cash advances reaching 2.5 per cent of gross domestic product (GDP) on a net basis at the end of September 2019.

Moody’s expects Nigeria’s debts to total N49trillion ($135billion) by the end of 2021, accounting for about 27 per cent of GDP. While still at moderate levels, debt has accumulated quickly over the last four years, almost tripling to an estimated N33trillion or 23.2per cent of GDP in 2019 from N12.6trillion or 13.2 per cent in 2015.

These figures includes the debts of the Federal Government, the states and local governments. They also include the net cash advances from the CBN, as well as the stock of promissory notes issued to clear past arrears.

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