Financial experts have expressed confidence that Nigeria's current debt profile is manageable and should not cause undue concern. In separate interviews with Newsmen in Lagos on Sunday, they responded to the rising public debt stock with a positive outlook.
Loans for Developmental Projects: No Need to Despair
Mr. Samuel Agbelaye, President of the Chartered Institute of Taxation of Nigeria, reassured Nigerians that recent loans obtained by the Federal Government are not alarming. According to Agbelaye, loans can be beneficial if used judiciously for developmental projects.
"Despite the rising debt, the country remains a going concern. The economic outlook is not as dire as some claim. The loans are intended for developmental purposes that will add value to the economy," Agbelaye stated.
Agbelaye emphasized that the focus should
be on how the government plans to increase cash flow to meet projected revenue,
rather than worrying about the debt stock or new loans.
Borrowing Is Necessary, Says Dr. Muda Yusuf
Dr. Muda Yusuf, CEO of the Centre for Private Enterprises, acknowledged the inevitability of borrowing given the current economic conditions. He explained that the expected foreign loans are part of the 2024 deficit budget to bridge the financing gap.
"Foreign loans are typically more concessionary with lower rates and are tied to specific projects," Yusuf explained.
Yusuf suggested that increasing oil and gas
output could reduce the need for borrowing, highlighting the importance of
addressing oil theft in the Niger Delta to meet international quotas.
Innovative Financing: A Solution from Mr. Okechukwu Unegbu
Mr. Okechukwu Unegbu, former President of the Chartered Institute of Bankers of Nigeria, advocated for more innovative financing solutions to avoid escalating public debt.
"The government should explore private equity financing for key infrastructure projects instead of borrowing for every capital project. Other countries use this model effectively," Unegbu noted.
Unegbu also recommended that all tiers of
government reduce their ostentatious lifestyles to free up funds for
development, thereby decreasing the need for foreign loans. He cautioned
against relying on foreign loans, which often come with conditions that may not
suit Nigeria's emerging economy.
Current Debt Situation and Projections
The Nigerian government is planning to secure more loans from international developmental partners. The World Bank is poised to lend $2.5 billion to Nigeria for economic stabilization and resource mobilization reform programs.
According to the Debt Management Office, Nigeria's total public debt stock has surged to N97.34 trillion as of the first quarter of 2023. This figure includes domestic and external debts of the Federal Government, the 36 state governments, and the Federal Capital Territory.
Under President Bola Tinubu's administration, Nigeria borrowed N20.1 trillion from domestic investors in its first year, a 117 percent year-on-year increase. Nigeria is among the top 10 African countries with the highest debt, owing $2.6 billion to the International Monetary Fund.
The IMF projects that Nigeria's public debt to GDP ratio will reach 46.6 percent in 2024 and 46.8 percent in 2025.
No comments:
Post a Comment