Following the statement from Nigeria’s Finance Minister, Mrs. Kemi Adeosun, regarding the country’s debt portfolio in order to advance the current infrastructure and development plans of the nation, the World Bank has cautioned on the imperative of cost of borrowing and sustaining revenues.
Speaking in Abuja on Monday, Gloria Josheph-Raji, World Bank Senior Economist, narrated that servicing debts by way of interest of loan had dried up Nigeria’s revenue, as such, such venture is not recommended.
Joseph-Raji said, “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 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.”
Finance Minister Adeosun had on Sunday consented that short term borrowing was the suitable option for Nigeria to savage the the critical infrastructure.
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