Nigeria faces unsustainable debt burden, says Rewane

The Managing Director of Financial Derivatives Company Limited, Mr Bismarck Rewane, has said Nigeria’s debt burden will become unsustainable as global interest rates rise in the near term.

The country’s total public debt stock rose to N33.11 trillion at the end of March 2021 from N32.92 trillion in December 2020, according to the Debt Management Office.

“Unsustainable debt burden [is] inevitable as global interest rates rise in the near term. Higher debt service costs will weigh on capital expenditure,” Rewane said in a presentation at the LBS Breakfast Session.

According to the financial expert, compared to sub-Saharan Africa, Nigeria is approximately 19 percent of SSA GDP but less than five percent of total external debt.

He put the country’s external debt at $32.86 billion, compared to SSA’s $720.1 billion.

“External reserves could fall below $33 billion as the Central Bank of Nigeria continues to intervene in the foreign exchange market and clears its forex demand backlog to foreign portfolio investors,” he said.

The external reserves stood at $33.10 billion as of July 15, down from $33.32 billion at the end of last month, according to the CBN.

Markets Reporters reported earlier that the Nigerian currency fell against the dollar at the parallel market on Friday to a new record low.

The naira closed at 506 to a dollar at the parallel market, down from 505/$1 on Thursday. It, however, strengthened by 0.20 percent to 410.38/$1 at the investors’ and exporters’ forex window, according to FMDQ Group.