The Chief Executive Officer of CFG Advisory, Tilewa Adebajo has stated that Nigeria was not yet in a debt crisis despite concerns over rising borrowings.
Adebajo however warned that urgent fiscal reforms were necessary to ensure long-term stability of the economy.
Speaking on Thursday morning during an interview on Arise News’ ‘The Morning Show’, Adebajo explained that while Nigeria has breached some provisions of the Fiscal Responsibility Act, the country’s debt remains manageable if corrective measures were taken promptly.
“It is to note that Nigeria is not yet in a debt crisis. We’ve breached certain tenets of the Fiscal Responsibility Act, which necessitates urgent fiscal reform,” Adebajo said.
He pointed to the Medium-Term Debt Strategy (MTDS) as a critical tool for ensuring sustainability in debt management.
According to him, the MTDS, commonly used by the International Monetary Fund (IMF) and the World Bank, provides a framework to assess and manage a country’s debt effectively.
“In terms of that reform, there was a medium-term debt strategy session that was normally done. It is a tool that the IMF and World Bank use to ensure that your debts are properly managed in a sustainable way. And going through the analysis, I think we came out with some parameters. So what I think is now important is that we need to look at some fiscal reforms. Fiscal reforms are more important than tax reforms,” he explained.
Adebajo further argued that the government’s emphasis on tax reforms should not overshadow the more pressing need for fiscal discipline and structural changes in public finance.
“In my view, fiscal reforms should have taken precedence over tax reforms,” he stressed.
Highlighting a positive note, Adebajo observed that most of the government’s debt financing was currently sourced from domestic market securities rather than the Central Bank’s “ways and means” advances.
This, he said, has helped to provide a measure of stability in Nigeria’s debt profile.
