2023: Economy may be dogged by slow growth, cautious optimism- Experts

• Published date: 08 January 2023
• Publication title: Nigeria - The Nation

The 2023 economic outlook is not showing lots of promises if the words of the bookmakers are anything to go by. For many economic and financial juggernauts who have literally gazed into their crystal balls, Nigeria's economy currently leaves absolutely nothing to cheer about given the headwinds economic managers are likely to confront this year, reports Ibrahim Apekhade Yusuf

The economic outlook for next year seems scary enough with the damning verdict of the World Bank which has warned that Nigeria's debt service cost to revenue ratio could hit 160 per cent in five years, starting next year.

Speaking at a roundtable in Lagos recently, Country Director, Shubham Chaudhuri, said the percentage of government's revenue going into debt service cost would continue to trend upward in the next five years and balloon to 160 per cent in 2027.

The ratio spiked post-COVID-19, hitting 76 per cent last year. There have been concerns, but the government explains its debt accumulation has been modest, except that revenues have failed to grow to match spending needs. The World Bank executives have aligned with the government's position and argued that 'more and better spending' is required to stimulate growth.

Chaudhuri, in his presentation to editors, also projected the interest payment to revenue to rise steadily to over 80 per cent in 2027. He, however, said the country has a rare opportunity to break decisively from the recent past and change the trajectory.

As is consistent with the World Bank, Chaudhuri identified petroleum subsidy removal and market-reflective foreign exchange adjustment as some of the low-hanging fruits the government could explore to free the choked fiscal space and give it sufficient headroom to begin to address the historical challenges.

The country director accepted there would be short-term shocks but warned that reforms are better carried out now than never and that the long-term repercussions of continual delays will be extremely painful.

Fear over debts real not imagined

In a veiled request few months ago, President Muhammadu Buhari sought for debt relief or outright cancellation at a United Nations General Assembly (UNGA) in the United States.

The Minister of Finance, Budget and National Planning, Zainab Ahmed, following up at the recent World Bank/International Monetary Meeting (IMF) meetings, said the country was considering a request for debt restructuring, though this was later retracted.

According to available information, the Federal...