Following the global economy experience of new shocks and contractions, the International Monetary Fund (IMF) Sent warning to Nigeria to expect a significant reduction in foreign loans if such continues.
This the IMF Deputy Divisional Chief, Wenjie Chen, disclosed during a keynote presentation at the International Monetary Fund Regional Economic Outlook which was held in Lagos on Tuesday.os Slum Dwellers
According to Chen, borrowing costs, high-interest rates and the increasing value of the dollar have continued to put a strain on Nigeria’s economy and that of its Sub-Saharan African counterparts.
She noted that due to the uncertainties surrounding the global economic environment, loans from China as well as other advanced economies to Africa have been on a decline.
Stating that the public debt ratio has doubled in the region in the past decade, Chen added that debt vulnerabilities of Nigeria and the rest of SSA would continue to increase.
Chen said, “In terms of the funding squeeze, the three main manifestations that many countries are facing are: the rise in borrowing costs. You can see that virtually all the frontier markets have been shut out of the Eurobond markets since the spring of 2022. What that means is that they cannot raise financing on these international markets. Eurobond market has been a large component of financing for these countries.
“Lastly, what this has meant in terms of the global economy’s reaction to the Russia-Ukraine war in terms of rises in price and the cost of living crisis has placed very high interest rates. Not only were interest rates rising, the value of the dollar rose to a 20-year high last year. For many African countries, the cost of servicing these debts has also gone up.
Jaiyeola also commended the African Export Import Bank for its initiative in developing an intra-African payment system that will facilitate payments for trade within African countries. This, he said, would weaken the stranglehold that the dollar has continued to have on African countries.
Also speaking, a professor of Economics at Lagos Business School, Bongo Ali, said the government had been “very woeful” with regard to public spending, lamenting that the cost of delivering infrastructure in Nigeria had often cost far more than what it costs in other countries.
According to him, the Nigerian government’s frequent borrowing spree seldom has anything to do with public interest, but to serve its undeclared purposes