We have reduced the debt service ratio by 29% in one year – Tinubu

President Bola Ahmed Tinubu has said that his administration has reduced Nigeria’s debt service ratio by 29 percent, as part of some of his administration’s achievements.

Tinubu said this at his broadcast to commemorate Nigeria’s 64th Independence on Tuesday.

“We have reduced the debt service ratio from 97 per cent to 68 per cent. Despite all these, we have managed to keep our foreign reserve at $37 billion. We continue to meet all our obligations and pay our bills” he said.

He further stated that the Central Bank’s orthodox stance has ensured “stability and predictability in the foreign exchange market”.

“We inherited a reserve of over $33 billion 16 months ago. Since then, we have paid back the inherited forex backlog of $7 billion. We have cleared the ways and means debt of over N30 trillion,” he said.

Nigeria’s total debt stock rose from N49.85 trillion in March 2023 to N121.67 trillion in March 2024 (an increase of 144%).

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However, when expressed in dollar terms, it shows that the debt fell from $108.30 billion to $91.46 billion (a 15.54% decline) during this period.

After controlling for the devaluation effect, it is found that Nigeria’s total debt (valued at March 2023 exchange rate) effectively rose from $108.30 billion to $184.72 billion as of March 2024, BusinessDay’s analysis shows.

Debt servicing in Nigeria gulped 66.9 percent of the Federal Government’s total revenue in 2023, BusinessDay earlier reported.

Last year’s figure is lower than 99.3 percent (N4.23 trillion) that debt service gulped in 2022.

However, Afreximbank, Africa’s leading export-import bank, earlier reported that Nigeria’s debt service to revenue ratio may hit 110.4 percent this year, raising concerns about the financial health of the country.

“The debt service to revenue ratio has increased significantly, from 33.8% in 2017 to a projected 110.4% in 2024, signaling potential difficulties in meeting debt servicing obligations relative to revenue generation,” Afreximbank said a report.

Tinubu further stated that the government would implement fiscal policy reforms to ‘stimulate productive capacity and create more jobs and prosperity’.

“As part of our efforts to re-engineer our political economy, we are resolute in our determination to implement the Supreme Court judgment on the financial autonomy of local governments,” he stated.