IMF warns Nigeria against rising foreign debts
APA – Lagos (Nigeria) - The Fund however, commended Nigeria for the recent reforms aimed at reducing infrastructure gap in the country, adding that it was in support of the measures.
The Assistant Director, Fiscal Affairs Department of the IMF, Mrs. Catherine Pattillo, who gave the warning on the sidelines of the release of the Fiscal Monitor Report by the Fund in Washington on Wednesday, said: “The concern in a number of oil exporters is that unless there is action now, that debt, which has been rising in many countries, is a concern particularly because of the interest payments.
“So, if you have continuing rise in debt, the interest payments will rise, and then, it will 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, and increasing growth and employment.
“So, for ensuring that you have the ability to use those revenues for enhancing expenditure, there is a need to make sure that debt is sustained and interest to revenue is kept at a reasonable level.”
A report by a local newspaper, the Punch on Thursday said that the IMF official stated that the Fund was supportive of recent economic reforms in Nigeria, especially the manner in which foreign borrowings are being channeled to infrastructure growth.
She, however, emphasised the need to increase non-oil revenue collection in the country.
The report noted that Nigeria’s Minister of Finance Kemi Adeosun had said the thought of saddling future generations of Nigerians with unserviceable debts was not part of the President Muhammadu Buhari administration’s agenda.
Adeosun stated this in an article entitled, ‘The debt debate: Deconstructing the debt story’, in which she explained the debt history, the short-term strategy and the medium to long-term outlook for the Nigerian economy.
She noted that to deliver a fundamental structural change to the economy that would reduce the country’s exposure to crude oil, an expansionary fiscal policy was adopted with an enlarged budget, which would be funded in the short-term by borrowing.
Meanwhile, President Muhammadu Buhari has just requested the National Assembly to approve a request to borrow $5.5 billion.
The Nigerian Government has so far raised $1.5 billion through Eurobond this year and another N100 billion through Sukuk bonds already invested in infrastructure funding.
The country’s public debt as at June 2017 stood at $64.19 billion, according to the data from the Debt Management Office.