Nigeria Sliding Into Debt Trap, IMF Warns

The International Monetary Fund (IMF) on Monday warned that Nigeria was siding into yet another debt trap, describing the country’s debt to revenue ratio put at 63 percent as “extremely high.”
Speaking at a press conference on the sidelines of the World Bank Group Spring Meetings in Washington DC, Mrs Catherine Pattillo, Assistant Director, Fiscal Affairs Department of the IMF warned against further attempts at borrowing.
According to the IMF official, “Borrowing by countries can create benefits if used for investments of high returns. Our evidence suggests that’s not the case in some countries, especially in Nigeria. So rising debt can create the vulnerabilities.
Head of the International Monetary Fund, Christine Lagarde, had last month told world financial leaders from some developing countries that global debt had soared to 220 per cent of global output.
This global debt, she added, was casting a shadow over future growth prospects, adding, “This is a potential risk that is looming on the horizon of the otherwise quite sunny sky of the global economy.”

However, dismissing fears of sliding into yet another debt trap, Nigeria’s head of the Debt Management Office (DMO), Ms. Patience Oniha, said there was no cause for alarm.
“Without borrowing, we won’t be able to deliver on the budget and I think we should be clear about that and a lot of that went into capital projects, said Oniha at the Spring 2018 Issue of the Regional Economic Outlook for Sub-Saharan Africa.
“We are still borrowing because there are provisions for borrowing in the budget. But in terms of how much it cost us to borrow, we are working actively on reducing that and reducing the refinancing risk that we had with Treasury bills every 90 days, every six months.”
“What are we doing on debt service? The new debt management strategy, which we started implementing last year, seeks to moderate the growth of interest expense by shifting some of the borrowing externally,” she said.
Nigeria foreign debt has risen to $19 billion, while domestic debt is N15.9 trillion, according to document from the DMO.