Global trade association, the Institute of International Finance, has said that the global debt hit a record $307tn in the second quarter of 2023.
IIF said the record was made despite hikes in interest rates across the globe with markets such as the United States, Japan, the UK and France driving the rise.
This comes after the National Bureau of Statistics revealed that Nigeria’s public debt stock which includes external and domestic debt stood at N87.38tn ($113.42bn) in the second quarter of 2023 from N49.85tn ($108.30bn) in Q1 2023, indicating a growth rate of 75.27 per cent on a quarter-on-quarter basis.
Nigeria’s total external debt stood at N33.25tn ($43.16bn) in Q2 2023, while total domestic debt was N54.13tn ($70.26bn).
The group in its global debt monitor report published on Tuesday said that the world’s debt had risen by $10tn in the first half of 2023 and by $100tn in the last ten years.
The report said the latest increase has pushed up the global debt-to-GDP ratio for a second straight quarter to 336 per cent. Prior to 2023, the debt ratio had been declining for seven quarters.
Slower growth, alongside a deceleration in price increases, were behind the debt ratio rise, the report said.
“The sudden rise in inflation was the main factor behind the sharp decline in debt ratio over the past two years,” the IIF said.
The group added that with wage and price pressures moderating, even if not to their targets, it expects the debt-to-output ratio to surpass 337 per cent by the end of 2023.
“Our concern is that countries will have to allocate more and more to interest expenses. It will have long-term implications for countries’ funding costs and debt dynamics,” said the lead author of the IIF’s report, Emre Tiftik.
The previous record for global debt was in early 2022 before central banks across the world started aggressively raising interest rates in a bid to fight inflation.
In Nigeria, the Monetary Policy Committee of the Central Bank of Nigeria has consistently raised the MP rate due to stubborn inflation which stood at 25.80 per cent in August 2023.
At sub-national levels, Lagos State had the highest domestic debt in Q2 2023 with N996.44bn, followed by Delta with N465.40bn. Jigawa State recorded the lowest domestic debt with N43.13bn, followed by Kebbi with N60.94bn.
Lagos State also recorded the highest external debt with $1.26bn, followed by Kaduna with $569.38mn. Borno State had the least external debt with $18.75m, followed by Taraba with $21.92m.
Madukwe B. Nwabuisi is an accomplished journalist renown for his fearless reporting style and extensive expertise in the field. He is an investigative journalist, who has established himself as a kamikaze reporter.
