Borrowing headache: IMF, World Bank restate fears for Nigeria

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Bretton Woods Institutions, the International Monetary Fund and the World Bank, have urged Nigeria to softpedal on its borrowings and build fiscal bufers against imminent global economic risks.

But, Nigeria has assured both institutions that its borrowings are still within fiscal limits, for now.

Minister of Finance, Mrs Zainab Ahmed disclosed this to the the News Agency of Nigeria (NAN) on the sidelinesof the just- concluded IMF/World Bank meetings, which took place in Washington DC from April 9 to 14.

The minister said while government borrows to deliver on its promises, it was also mindful of rising debt burden, which eats up about 25 per cent of the country’s annual earnings.

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Nigeria currently has an external debt stock of about $24.27 billion; as at December 31, 2018.

Euro bonds, loans from World Bank Group, China and Africa Development Bank Group make up over 80 per cent of the country’s debt stock.

Ahmed insisted that, in spite of warnings by the IMF and World Bank, the country is not in any way near a debt crisis.

“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.

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“We are very mindful of the level of our borrowings. Our borrowing 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,’’ she said.

In response to concerns about whether the Chinese loans to finance the Idu-Kaduna, Lagos-Ibadan and Abuja light rail projects, the expansion of four airport terminals and some hydroelectric projects across the country were healthy for the nation’s economy, the minister replied: “To borrow, we go through several processes of assessments as well as negotiations.

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“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 of borrowing.

“So far, the conditions we’ve got are very good ones,’’ she said.

Ahmed restated the commitment of the President Muhammadu Buhari-led administration to ensure that Nigeria grows in a manner that would bring many people out of poverty.

She said it is for this reason that government takes its social investment programmes seriously.

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