The World Bank has disagreed with Nigeria’s Minister of Finance, Mrs. Kemi Adeosun, on the need for the Federal Government to borrow more in order to develop infrastructure and the economy.
“Nigeria has a decent debt-to-GDP ratio, currently about 19 per cent. It is the debt to revenue ratio that is of concern and that rate is a sustainable issue. That is of concern to us and that is also of concern to the government.”
The World Bank spoke through its Senior Economist, Gloria Joseph-Raji, on Monday in Abuja, saying that the cost of borrowing or paying interest on Nigeria’s debt was not sustainable as revenues to make such payment had dried up.
She spoke with Punch on the sidelines of the lunch of Africa Pulse, a biannual report on Africa.
Mr.s Adeosun had on Sunday at a press briefing in Washington DC, said that Nigerians would have to tolerate more borrowings in the short term for the government to deliver critical infrastructure.
But Joseph-Raji said that dwindling revenues had raised a concern both at the Federal Government and the World Bank on sustainability of Nigeria’s borrowings as debt-to-revenue ratio had increased by 25 per cent within a period of one year.
Joseph-Raji said, “The government is aware that the debt is looking more unsustainable from the point of debt service to revenue ratio. The estimate we had for last year at the federal level was about 60 per cent. That is coming from about 35 per cent in 2015.
“That reflects the substantially lower revenues that Nigeria recorded last year. Even among the state governments; we know that a lot of state governments are servicing a lot of debts from their federation account allocation. So, there is really going to be a sustainable issue emerging.”
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