Analysts have projected that Nigeria is set to add more than N13 trillion to its debt profile in 2025Analysts at Afrinvest projected that the government’s new borrowings would exceed the projected amountThey state that domestic borrowing could surpass the target, needing net issuances of N13.7 trillion minimum in 2025
Henzodaily.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
Experts have projected that the Nigerian government’s new borrowings may surpass the planned 13 trillion to bridge the budget deficit.
Afrinvest Research analysts disclosed in their 2025 Outlook Report that about N13.7 trillion in issuances may be needed to bridge the gap between the proposed expenditures and revenue in the 2025 budget.
President Bola Tinubu’s government to add new debts in 2025 to bridge budget shortfalls
Credit: State House
Source: Getty Images
The new report projects new sources of revenue
The report ruled out the possibility of the Eurobond market in 2024.
The Nigerian government has budgeted N49.7 trillion for 2025, projecting a revenue of N36.35 trillion based on improved non-oil revenue.
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This includes increased tax collections, Customs duties, independent revenue from agencies and enterprises and oil revenue forecast based on a crude oil price of $75 per barrel, a production target of 2.06mbpd, and the exchange rate of N1,500 per dollar.
The 2025 budget targets a fiscal deficit of N13.39 trillion, which the government said will be funded via domestic and external borrowings and public-private partnerships.
The Afrinvest report disclosed that FG plans domestic and foreign borrowings of N7.4 trillion and N1.8 trillion to bridge a budget shortfall of N13 trillion this year.
Nigeria’s Eurobond sales surge
Afrivest analysts estimated domestic borrowing could surpass the target, needing net issuances of N13.7 trillion minimum in 2025.
The report also estimated FX inflows of N28.45 trillion from Treasury bills and coupon payments against outflows via gross paper supply of N37.5 trillion.
“We also do not rule out the possibility of a Eurobond market outing in 2025,” the report stated.
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The company estimated that treasury bills will bring the highest amount, N12.47 trillion, followed by OMO sales at N11.34 trillion. Total inflow is projected to peak in Q1 2025 at N9.08 trillion.
According to Punch, Nigeria raised more funds via Eurobond in November, oversubscribed by $9 billion.
The government sold $700 worth of the six-and-a-half-year Eurobond maturing in 2031 at a coupon rate of 9.625% and $1.5 billion of the 10-year tenure at 10.375%.
World Bank disburses new loan to Nigeria
This development comes as the World Bank disbursed a $1.5 billion loan to Nigeria as it implemented key reforms, including petrol subsidy removal and tax reforms.
The disbursement is part of the Reforms for Economic Stabilisation to Enable Transformation Development Policy Financing scheme and also one of the fastest disbursements Nigeria has received, with both tranches coming in less than six weeks.
A World Bank document shows that the loan was approved on June 13, 2024, and the first payment was made on July 2, 2024.
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Nigeria’s total debt profile rises to N134trn
Henzodaily.ng previously reported that Nigeria’s total debt profile spiked by N12.6 trillion in three months to N134.3 trillion towards the end of the second quarter of 2024.
The increase is 10.35% from the N121.7 trillion recorded in the first quarter 2024.
An official document presented at a session on the sidelines of the World Bank/IMF annual meetings in Washington, DC, shows that the spike was due to the naira devaluation.
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Source: Henzodaily.ng