Minister of finance, Kemi Adeosun, has allayed fears over Nigeria’s debt burden, saying it is sustainable and under control.
LEADERSHIP Weekend recalls that the International Monetary Fund (IMF) had few days ago raised the alarm over Africa’s rising dept profile.
But speaking to newsmen on the sidelines of the G20 finance ministers and Central Bank governors’ meetings at the ongoing 2018 IMF and World Bank meeting in Washington DC, Adeosun said Nigeria had nothing to worry about concerning its debt profile.
She said: “It is correct that debt levels in low-income countries are a threat but Nigeria is better described as a middle-income country. The concern that has been expressed, and it’s a legitimate one, is that debt levels in those countries are at 55 per cent of Gross Domestic Product (GDP), which is very high, but Nigeria’s is at less than 20 per cent. So we are not one of the countries they have expressed concerns about.
“However we will continue to manage our debt very, very responsibly. We are at 20 per cent of GDP and we do not intend to grow it aggressively. We are doing well at the moment as debt rate to revenue is going down gradually as we replace debt with revenue and refinance our debt.”
According to the finance minister, the government will keep monitoring and analysing its
debt levels at every stage so that it does not fall into the trap that most African states had fallen into.
She reminded Nigerians that due to recession and near total collapse of major sources of income which the present administration had inherited from the former one, the government had no choice but to borrow in order to save the country.
“There were two options. One was austerity, cut back, lay people off and wait for the oil prices to rebound.
“The other was to be more aggressive by expanding the budget, take on more debt and invest in infrastructure in the hope that you will get growth going and then you will be able to develop more revenues.
“Step one, two and three of that has been done: We expanded our budget; we pumped money into the economy; we made sure that recession wasn’t prolonged and we are now back into growth.
“What we need to do now is to accelerate that growth and focus on revenue mobilisation which in turn will reduce our debt pressures.
“Some of the ministers that I was in the meeting with (are from countries that) are still in recession. And that means real pain for a long time.
“”In Nigeria, to shorten it we had to borrow in order to do so and I make no apologies for that; that was the right thing to do,” she asserted.
On Thursday, the IMF managing director, Ms Christine Lagarde, had said that global debt stood at $164 trillion, which was 25 per cent of global GDP.
She said the rising debt levels presented risk to low-income countries, adding that such countries may face hardship and be unable to repay these debts if they do not look for other measures rather than borrowing.
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