Nigeria’s ability to repay its N24.39 trillion debt is in
question after the International Monetary Fund (IMF) expressed concern about
the rollover risks, arguing Nigeria’s capacity to refinance might drop in the
future.
The concern was raised by the Financial Counsellor and
Director, Monetary and Capital Markets Department, IMF, Tobias Adrian, while
presenting the Global Financial Stability Report at the ongoing joint annual
spring meetings with the World Bank in Washington DC.
Nigeria’s total external and domestic debts rose to N24.387
trillion in 2018. Debt Management Office disclosed that Total Public Debt stood
at N24.387 trillion as of December 31, 2018, representing a year-on-year
increase of 12.25% in Nigeria’s debt stock.
“NIGERIA HAS BEEN BORROWING IN INTERNATIONAL MARKETS BUT WE
WORRY. SO, ON THE ONE HAND, THAT IS VERY GOOD BECAUSE IT ALLOWS NIGERIA TO
INVEST MORE; BUT ON THE OTHER HAND, WE DO WORRY ABOUT ROLLOVER RISKS GOING
FORWARD.
“AT THE MOMENT, FUNDING CONDITIONS IN ECONOMIES SUCH AS
NIGERIA AND OTHER SUB-SAHARAN AFRICAN COUNTRIES ARE VERY FAVOURABLE BUT THAT
MIGHT CHANGE AT SOME POINT. AND THERE IS A RISK OF ROLLOVERS AND THERE IS THE
RISK OF WHETHER THESE NEEDS FOR REFINANCING CAN BE MET IN THE FUTURE.”
Federal Government rebuff IMF claim
The Nigerian Government countered IMF statement, saying the
nation’s debt burden is sustainable, adding that the debt burden will have no
negative impact on Nigeria’s economy.
While reacting to IMF‘s statement, the Minister of Budget
and National Planning, Senator Udoma Udo-Udoma said steps are being taken to
ensure Nigeria doesn’t have a debt problem.
One of the steps is widening of tax collection- This is
according to Udoma who spoke after the end of Wednesday’s Federal Executive
Council meeting at the Presidential Villa in Abuja.
“WITH REGARD TO OUR DEBTS, OUR DEBTS ARE SUSTAINABLE.
“WE DO HAVE A REVENUE CHALLENGE AND WE ARE FOCUSING ON THAT.
ONCE THE REVENUES COME UP, IT WILL BE OBVIOUS THAT WE DON’T HAVE A DEBT PROBLEM
AT ALL.
“WE ARE WORKING ON A NUMBER OF INITIATIVES TO INCREASE OUR
REVENUES. WE ARE LOOKING AT INITIATIVES TO WIDEN THE TAX BASE. WE ARE LOOKING
AT INITIATIVES TO INCREASE EFFICIENCY IN COLLECTION.
“WE ARE LOOKING AT A SINGLE WINDOW, WHICH WILL HELP TO
INCREASE EFFICIENCY, CUSTOM COLLECTIONS. WE ARE LOOKING AT MANY DIFFERENT WAYS
TO IMPROVE REVENUES.
“THE DEBTS ARE SUSTAINABLE; EVERY NATION BORROWS. WE ARE
WORKING ON INCREASING OUR REVENUES.”
By Fakoyejo Olalekan
