By Uche Mbah
The international Monetary Fund, IMF, has cautioned Nigeria against its rising debt profile, citing debt to GDP ratio rise of 28% as a bad omen, even though it is below the average for Sub Saharan Africa.
This was the view of the Senior Resident Representative and Mission Chief for Nigeria, Mr Amine Mati, who spoke recently in Lagos during the public presentation of the ‘Fall 2019 issue of the regional economic outlook for sub-Saharan Africa’.
President Muhammadu Buhari has resubmitted a letter asking to borrow $30 billion for infrastructure, after the Eight senate rejected such proposal. it is believed that this Senate, which the opposition Peoples democratic party has labelled rubber stamp, will speedily approve it this time.
This is not the first time that IMF is expressing such concerns about Nigeria. In fact, this is the third time this year that the International Financial Institution has worried about the borrowing bazaar of the Country within the last five years.
In April this year, during the joint annual spring meetings with the World Bank in Washington DC, the IMF had expressed concern over Nigeria’s ability to repay its N24.387tn. foreign debt.
In another fora, they expressed concerns over the diversion of funds borrowed to fund other things that it was not borrowed for.
This time, the IMF’s Amine Marti warned of the increase in debt.
Hear him: “Nigeria’s debt has increased but the level is way below the average for the region. Even if we include the CBN overdraft and others, we are talking about a debt to GDP ratio that does not go beyond 27 to 28 per cent to GDP and that is including AMCON overdrafts and others.
“For resource intensive countries and the non-resource intensive countries, one thing that is common is that when there is trade shock, they have to react. So, you lose revenues, debt goes up.
“In most countries, you would see debt is about 50 per cent to GDP and has increased since 2016 in all cases. But what is new is that most of the countries are back on a sustainable path and have plans to reduce debt through fiscal consolidation and they seem to have stabilized.
“The growth in per capita to the GDP since 2016 has been sustained for the 12 group of countries and has stayed sluggish for the group of countries because they have to be dealing with trade shock and how they respond to the shock has also affected what is their path.”
