The International Monetary Fund (IMF) on Wednesday warned Nigeria and other oil-exporting countries over their rising foreign debts.
The warning comes on the heels of the executive’s recent request asking the Senate to approve its plan to $5.5bn money to finance the 2017 Budget.
Speaking on the sidelines of the World Bank/IMF Annual Meetings in Washington D.C, where the Fiscal Monitor Report by the Fund was released, the IMF Assistant Director, Fiscal Affairs Department, Mrs Catherine Pattillo said though Nigeria’s preoccupation with infrastructural growth is commendable, it must watch against overburdening itself with debts and interests.
This, she said, can be done if the country pays more attention to its non-oil revenue generators so the recent external borrowings would not create future debt crises.
She said: “The concern in a number of oil exporters is that unless there is action now, that debt, which has been rising in many countries, is a concern particularly because of the interest payments.
“So, if you have continuing rise in debt, the interest payments will rise, and then, it will consume a large part of any revenue that you collect and you won’t be able to use that revenue for the objectives of the economic growth and recovery programme, and increasing growth and employment.
“So, for ensuring that you have the ability to use those revenues for enhancing expenditure, there is a need to make sure that debt is sustained and interest to revenue is kept at a reasonable level.”
“So, the message is front-loaded fiscal consolidation, emphasise non-oil revenue mobilisation and there are certain measures both on the tax and spending that the IMF team have been emphasising on,” she added.
This position was reiterated by the IMF Director, Monetary and Capital Markets Department Tobias Adrian, who lamented the rising debt levels of emerging markets and low-income earning nations.
According to him, emerging market countries needed to take advantage of improved financing conditions to address imbalances. He said action is required now because vulnerabilities are building and could put growth at risk in the future.
According to the Debt Management Office (DMO), Nigeria’s public profile, as at June 2017, stood at $64.19 billion (N19.63 trillion). The country had earlier in the year raised $1.5bn and N100bn from the issuance of Eurobonds and Sukuk bonds respectively.
The Sukuk bond already has been invested in line with the federal government’s infrastructural drive.