The International Monetary Fund (IMF) yesterday warned the Federal Government about its rising debt profile, especially of foreign loans.
Speaking yesterday at the ongoing World Bank/IMF Annual Meetings in Washington D.C, IMF Director, Monetary and Capital Markets Department Tobias Adrian, lamented that external borrowing in emerging markets and low-income countries, which includes Nigeria, is rising.
Adrian who unveiled the Global Financial Stability Report said such borrowing would become a challenge if resources realised from them are not put to good use.
President Muhammadu Buhari has requested the National Assembly to approve a request to borrow $5.5 billion.
The Federal Government has so far raised $1.5 billion through Eurobond this year and another N100 billion through Sukuk bonds already invetsed in infrastructure funding.
Nigeria’s public debt as at June 2017 stood at $64.19 billion (N19.63 trillion) according to data from the Debt Management Office (DMO).
Adrian said emerging market countries needed to take advantage of improved financing conditions to address imbalances, continuing to reduce private sector leverage where high, and managing external and sovereign debt exposures. He said action is required now because vulnerabilities are building and could put growth at risk in the future.
The IMF Director said despite low interest rates, debt servicing burdens have risen in several economies. And while borrowing has helped the recovery, it has also created new financial risks.
IMF Assistant Director in Fiscal Affairs Department, Mrs. Catherine Pattillo admitted that there are lots of positive reforms in Nigeria, including drive to bridge infrastructure gap particularly in the power sector.
She however urged government to do more especially in mobilizing more non-oil revenues.
On the rising debt profile, she said: “The concern in a number of oil exporters is that unless there is action now, debt which has been rising is a concern because of the interest payments. So, if you have continuing rise in debt, the interest payments would consume a large part of any revenue that you collect and you won’t be able to use that revenue for the objectives of the economic growth and recovery programme like increasing growth and employment”.
“So for insuring that you have the ability to use those revenues for enhancing expenditure, there is a need to make sure that interest to revenue is kept at reasonable level”.
The World Bank has said recovery is underway in Sub-Saharan Africa with the Gross Domestic Product (GDP) growth expected to strengthen to 3.2 per cent in 2018 following a sharp slowdown in the past two years.
This is according to the Bi-Annual Africa Pulse report of the bank which focuses on the economies of African countries, released yesterday in Washington DC.
According to the report, Sub-Saharan Africa, including Nigeria, grew by 2.4 per cent in 2017 from 1.3 per cent in 2016, slightly below the pace previously projected.
According to the report, the rebound in the region is led by the region’s largest economies – Nigeria and South Africa.
“In the second quarter of 2017, Nigeria exited a five-quarter recession and South Africa emerged from two successive quarters of negative growth. Economic activity has also picked up in Angola.
“A recovery in the oil sector, partly due to a decline in militants’ attacks on oil pipelines, helped Nigeria pull out of five consecutive quarters of negative growth but the rebound was softer than expected.
“Growth in Nigeria is projected to pickup from 1 per cent in 2017 to 2.5 per cent in 2018 and 2.8 per cent in 2019.
The forecast for 2019 was revised up by 0.3 percentage, reflecting the expectations that oil production will remain robust and reforms in the foriegn exchange market will help boost growth in the non-oil sector,” the report showed.
The report also shows that International Bonds and equity flows in the region, especially to Nigeria, have increased and are helping to finance the current account deficits and cushion foreign reserves.
The report also commended the improved access to foreign exchange in Nigeria, thanks to the recent polices of the Central Bank of Nigeria, saying it had led to “pick up in equity and portfolio inflows”.
“In April 2017, the CBN introduced a new investor and exporter window, which had helped to improve businesses’ access to foreign exchange,” it said.
In a video conference to discuss the latest report, World Bank Chief Economist for Africa Mr Albert Zeufack, said the fiscal space narrowed significantly for most countries in the region in recent years amid rising debt burdens.
“Most countries do not have significant wiggle room when it comes to having enough fiscal space to cope with economic volatility.
“It is imperative that countries adopt appropriate fiscal policies and structural measures now to strengthen economic resilience, boost productivity, increase investment, and promote economic diversification,” he said.
Also, the World Bank Lead Economist and lead author of the report, Mrs Punam Chuhan-Pole said that the outlook for the region remained challenging as economic growth remained very low.
“Moreover, the moderate pace of growth will only yield slow gains in per capita income that will not be enough to harness broad-based prosperity and accelerate poverty reduction,” she said.
Meanwhile the acting Country Director for World Bank Nigeria, Mr Khairy Al-Jamal reiterated the World Bank’s commitment to working with Nigeria to achieve a robust inclusive and sustainable growth.
Al-Jamal said that the bank was committed to support the Federal Government to improve its water, roads, education and health infrastructure as well as other services to poor and vulnerable people.
He also said the World Bank was assisting Nigeria in the aspect of domestic resource mobilisation, through the expansion of its revenue base and to improve efficiency in tax collection.
Welcome to Street Journal Forum, Our motto is "We Disagree To Agree", you can have an open discussion here on anything, you can respond to Topics freely. Upload pictures you want to share and please invite your friends!
We Disagree To Agree.....Let discuss everything!
First unread post • Total posts 25398 • Page 1 of 1
Who is online
Registered users: Google [Bot]