Reports in August 2021 that the Federal Government of Nigeria (FGN) intended to raise $3 billion in Eurobonds—dollar-denominated debt—to finance the 2021 budget sparked intense conversations within economic circles… and on Twitter. It is not that people were surprised by the news. After all, the National Assembly had approved a $6.2 billion external borrowing plan the prior month. Rather, the consternation came from concerns that Nigeria was taking on too much (external) debt. Amid the murmuring, an important question was asked: is Nigeria headed to a debt crisis, or, worse, are we already in one?
Can Nigeria repay its debt?
Ordinarily, this question would be easy to answer. The Debt Management Office (DMO), the institution with oversight over Nigeria's borrowing decisions, periodically assesses our debt sustainability in their aptly named Debt Sustainability Analysis reports. According to the reports, the objective is to "evaluate the level and risks associated with public debt".
Coincidentally, they released the
