We’re mindful of Nigeria’s rising debt burden, says Minister
The Minister of Finance, Mrs. Zainab Ahmed, has said the Federal Government is mindful of the nation’s rising debt burden which eats up about 25 per cent of its yearly earnings, adding however, that the borrowings were to deliver on the promises of the President Muhammadu Buhari administration.
The International Monetary Fund IMF had recently warned of imminent danger over Nigeria’s rising debt profile, which it put at 34 per cent of the nominal Gross Domestic ProductGDP of $376bn as of December 2017, with private debt accounting for 36.6 per cent of the debt.
The Minister, who spoke to the News Agency of Nigeria on the sidelines of the just concluded IMF/World Bank yearly meetings in Washington DC, United States.
Available records show that Nigeria currently has an external debt stock of about $24.27 billion as at December 31, 2018.Euro bonds, loans from the World Bank Group, China and the African Development Bank Group make up over 80 per cent of the country’s debt stock.
According to her, in spite of the warnings by the IMF and World Bank, the country was not in any way near a debt crisis. She said: “The World Bank and IMF are cautioning us on the rate at which we are borrowing.
“They are also cautioning us on the need to build fiscal buffers because the global economy is going to be facing some risks and we agree with that. “We are very mindful of the level of our borrowings. Ours is very much within fiscal limits right now. “What we are doing is to increase our revenue-generating capacity to make it easier for us to meet our debt obligations and our routine as well as capital expenditure.”
On concerns for the Chinese infrastructure loans on the health of the economy and the terms of the facilities, the minister stated: “To borrow, we go through several processes of assessments as well as negotiations. ”She added: “We make sure we get the best possible terms and whether we are borrowing from financial institutions or in Europe or China or anywhere else, we try to get the best rates. So far, the conditions we have got are very good ones.’’
Experts argue that with Nigeria listed among the low-income developing countries, her public debt continued to grow since 2017 and, in some cases, reached levels close to those seen when countries sought debt relief.
The Washington-based fund said, “With financial conditions tightening in many countries, which includes rising interest rates, prospects for bringing debt down remain uncertain. The high levels of corporate and government debt built up over years of easy global financial conditions constitute a potential fault line.